Forex Marketz Daily Forex News – Fully Markets Update
Overnight, during North American trade hours, the yield on the benchmark 10 year Treasury note finally traded at the key and game changing rate of three percent. The yield has not been this high since January 2014.
The yield on the short term two year Treasury note also set a multiyear record. This yield is above 2.5 percent. This rate has not been this high since September 2008.
As of 6 pm EST, Tuesday, the 10 year yield went above three percent. The yield, shortly after the opening bell, was gyrating slightly lower before gaining traction and inching its way higher.
This caused an immediate reaction in the U.S. stock markets. The Dow Jones was down over 400 points and the Nasdaq Composite also shed over 100 points on the day.
Global Investor are fixated on U.S. Yields as borrowing costs Inch Higher
Investors, around the world. Have been closely watching the 10 year Treasury rate over the last few days.
They are concerned that at three percent, investors will see a negative reaction from the global financial markets as U.S. borrowing costs will increase.
The 10 year yield is a barometer for U.S. mortgage rates as well as other financial instruments. This yield has been moving higher this month. There are signs of firming inflation. Also, the Federal Reserve is signaling that they will continue to gradually tighten its monetary policy. Last February, the yield went above 2.9 percent. That was enough to trigger a correction for U.S. equity markets and other global stock bourses.
The rise in rates this year is divisive on Wall Street. Some analysts and traders see firmer rates as a vote of confidence for the economy. The U.S. Government is getting ready to report on its first quarter gross domestic product. This is scheduled for Friday. The U.S. economy grew at around three percent for the last two quarters.
Others are taking a contrarian view. They see increased borrowing costs as a threat to the bull market. This bull market, still in play, was thanks to low rates and extraordinary Fed quantitative easing with super low rates.
