US Stocks Record Worst Day in Two Months as Investors Unnerved by Interest Rate Rise

US stocks yesterday recorded their worst day in two months, as investors were unnerved by economic data suggesting interest rates have further to rise after months of increases by the Federal Reserve. The S&P 500 index ended down 2 per cent, with declines in every sector, and the tech-heavy Nasdaq Composite slid 2.5 per cent. The yield on the benchmark 10-year Treasury note rose to 3.95 per cent while interest-rate sensitive two-year notes yielded 4.73 per cent, approaching levels last hit in November, which were the highest since 2007.

The US economy’s resilience and signs that inflation could prove tougher to rein in than expected have caused investors to bet that the European Central Bank will raise interest rates to all-time highs. Meanwhile, in Asia, the Bank of Japan intervened in the bond market to buy up billions of dollars worth of government bonds maturing in five, 10 and 25 years to stop interest rates rising above its target range.

Related Facts

• The blue-chip S&P 500 index ended down 2 per cent, with declines in every sector.
• The tech-heavy Nasdaq Composite slid 2.5 per cent.
• The yield on the benchmark 10-year Treasury note rose to 3.95 per cent.
• Interest-rate sensitive two-year notes yielded 4.73 per cent.
• McKinsey could cull as many as 2,000 back-office staff.
• China and Russia agreed to oppose all forms of “unilateral bullying”.
• Vivek Ramaswamy, a 37-year-old fund manager, has filed for US presidential run.

Key Takeaways

• US stocks yesterday recorded their worst day in two months, as investors were unnerved by economic data suggesting interest rates have further to rise after months of increases by the Federal Reserve.
• The yield on the benchmark 10-year Treasury note rose to 3.95 per cent while interest-rate sensitive two-year notes yielded 4.73 per cent, approaching levels last hit in November, which were the highest since 2007.
• Investors are betting that the European Central Bank will raise interest rates to all-time highs, spurred on by the eurozone economy’s resilience and signs that inflation could prove tougher to rein in than expected.
• The Bank of Japan today intervened in the bond market to buy up billions of dollars worth of government bonds maturing in five, 10 and 25 years to stop interest rates rising above its target range.
• McKinsey could cull as many as 2,000 back-office staff, and Vivek Ramaswamy, a 37-year-old fund manager, has filed for US presidential run.

The sell-off in the stock market is a reassessment of the Federal Reserve’s path and the stark rise in Treasury rates. The move higher in Treasury yields reinforces the Fed being tighter for longer. The US economy’s resilience and signs that inflation could prove tougher to rein in than expected have caused investors to bet that the European Central Bank will raise interest rates to all-time highs. The Bank of Japan also intervened in the bond market to buy up billions of dollars worth of government bonds maturing in five, 10 and 25 years to stop interest rates rising above its target range.

McKinsey could also be culling as many as 2,000 back-office staff, and Vivek Ramaswamy, a 37-year-old fund manager, has filed for US presidential run. China and Russia agreed to oppose all forms of “unilateral bullying” after meeting in Moscow.

Conclusion

The recent sell-off in the US stock market is a result of investors reassessing the Federal Reserve’s path and the stark rise in Treasury rates. The US economy’s resilience and signs that inflation could prove tougher to rein in than expected have caused investors to bet that the European Central Bank will raise interest rates to all-time highs. The Bank of Japan also intervened in the bond market to buy up billions of dollars worth of government bonds maturing in five, 10 and 25 years to stop interest rates rising above its target range. McKinsey could also be culling as many as 2,000 back-office staff, and Vivek Ramaswamy, a 37-year-old fund manager, has filed for US presidential run.