US Treasury Yield Hits 4%! Will Rate Cut Estimates Force Market Down?

Tiger_comments
10-24

On Wednesday, the benchmark 10-year US Treasury yield $Micro 10-Year Yield - main 2410(10Ymain)$, often referred to as the "global asset pricing anchor," hit 4.26%, its highest level since July.

1. Election trades and inflation outlooks have reduced expectations for rate cuts.

The recent rise in the 10-year yield has nearly mirrored increasing speculation in betting markets that former President Trump will win the election.

His tax cut policies could potentially reignite inflation.

According to the betting site Polymarket, Trump currently has a 64% chance of winning the November election, while Harris trails with a 36% chance.

However, Harris’s policies could also stoke inflation. Affected by inflation concern, the interest rate swap market has continuously lowered expectations for a Fed rate cut by the end of the year.

The latest pricing indicates the Fed will cut rates by only 38 basis points for the remainder of 2024, with nearly a 50% chance of skipping a cut in one of the final two meetings.

2. Rising Treasury yields are putting pressure on the stock market.

Interest-sensitive large-cap stocks like $NVIDIA Corp(NVDA)$ , $Apple(AAPL)$ , and $Amazon.com(AMZN)$ each fell more than 2%. Among the 11 sectors of $.SPX(.SPX)$, only utilities and real estate saw gains.

Goldman Sachs strategists recently warned that elevated Treasury yields could attract capital away from stocks and into bonds or other assets.

They project the S&P 500’s annual growth rate could be just 3% in the coming years, significantly lower than the 13% over the past decade and the long-term average of 11%.

The market is expected to remain volatile in the next two weeks, with sell-offs driven by pre-election risk aversion.

Will inflation and rate cut estimates change make US Treasuries yield higher?

Will market pullback due to Treasury's forces?

Leave your comments and also post to win tiger coins~

# S&P Target 6500? Is It Safe to Invest at High Levels?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment（16）

  • Top
  • Latest
  • Shyon
    ·10-24
    TOP
    Current economic conditions suggest that US Treasury yields are likely to rise in the near term due to inflation concerns and changing rate cut expectations. Speculation around former President Trump potentially winning the election raises worries about a resurgence of inflation from his tax cut policies. If inflation persists, investors may demand higher yields to offset the loss of purchasing power.

    Additionally, the interest rate swap market indicates a reduced expectation for a Federal Reserve rate cut by the end of the year. If the Fed maintains or raises rates in response to inflation, this could further elevate Treasury yields. The upcoming election also introduces uncertainty, prompting investors to adopt a risk-averse stance, which lead to sell-offs in equities and push yields on Treasuries higher.

    In summary, rising inflation concerns and shifting rate cut expectations are expected to drive Treasury yields up, compounded by pre-election volatility. @TigerStars @TigerGPT

    Reply
    Report
    Fold Replies
    • TigerGPT: 

      According to the news articles I found, here are the key points related to US Treasury yields and market expectations:

      US Treasury Yield Hits 4%! Will Rate Cut Estimates Force Market Down? - The benchmark 10-year US Treasury yield has been increasing, reaching 4%. This rise in yields is attributed to inflation concerns and changing rate cut expectations. The interest rate swap market indicates a reduced expectation for a Federal Reserve rate cut by the end of the year. This suggests that the market is anticipating the Fed to maintain or raise rates to address inflationary pressures. Read more

        

      US 10-Year Treasury Yield Slumps 4.9 Basis Points to 4.20%, Two-Year Rate Drops 3.7 Basis Points to 4.05% Early Thursday - The 10-year US Treasury yield experienced a decline of 4.9 basis points to 4.20%, while the two-year rate dropped 3.7 basis points to 4.05%. This movement indicates a potential shift in market sentiment and investor expectations regarding interest rates. Read more

        

      Treasuries Slide for Third Straight Day as Fed-Cut Bets Wane - Treasury yields have been increasing for three consecutive days. This trend is driven by the growing expectation that the Federal Reserve will lower interest rates at a gradual pace and concerns about the potential inflationary implications of the US presidential election. Read more

        

      Stock market today: US stocks drop and bond yields climb as investors temper expectations for rate cuts - US stocks edged lower as investors adjusted their outlook for Fed rate cuts. The market currently sees a 69% chance of the Fed cutting rates two more times in 2024. This adjustment in rate cut expectations has led to rising bond yields. Read more

        

      Overall, these articles indicate that US Treasury yields have been rising due to inflation concerns and changing rate cut expectations. The interest rate swap market suggests a reduced expectation for a Federal Reserve rate cut. The market is closely monitoring these developments, as they can impact investment decisions and potentially lead to volatility in the stock market.

      Please note that the information provided is based on current market conditions and news articles and should not be considered as investment advice. It's always important to conduct thorough research and analysis before making any investment decisions.

      10-24
      Reply
      Report
    • Reply
      Report
  • MHh
    ·10-24
    Inflation is expected to make US treasuries yield higher and market pullback is usually in tandem. In the same thought, rate cuts will slow down if inflation is sticky. The market will price these in as well as the risk of a recession.
    Reply
    Report
    Fold Replies
  • Success88
    ·10-24
    US presiden election, Iran Geographical unstable, North Korea tension. All lead to uncertain. US rate cut might slow down due to still US economy equally good. This lead to Trrasury Yield high, Gold and crypto market high.
    Reply
    Report
  • Cadi Poon
    ·10-24
    對利率敏感的大盤股，如$英偉達公司(NVDA)$,$蘋果(AAPL)$，和$亞馬遜(AMZN)$各跌超2%。在11個板塊中$.SPX(.SPX)$，只有公用事業和房地產出現上漲。

    高盛策略師最近警告稱，美國國債收益率上升可能會吸引資本從股票轉向債券或其他資產。

    他們計劃S&amp未來幾年，P 500指數的年增長率可能僅爲3%，明顯低於過去十年的13%和11%的長期平均水平。

    Reply
    Report
  • TimothyX
    ·10-24
    最近10年期國債收益率的上漲幾乎反映了博彩市場對前總統特朗普將贏得大選的猜測不斷增加。

    他的減稅政策可能會重燃通貨膨脹.

    根據博彩網站Polymarket的數據，特朗普目前有64%的機會贏得11月的大選，而哈里斯以36%的機會落後。


    然而，哈里斯的政策也可能加劇通脹。受通脹擔憂影響，利率互換市場不斷下調美聯儲年底降息預期。

    Reply
    Report
  • WanEH
    ·10-24
    I think us federal will continue with the rate cut in future. and it will cause market become volatile.
    Reply
    Report
  • MicroStrategist
    ·10-24
    Maybe...Maybe not. it's elections so the markets will keep pumping 🚀🚀🚀🚀🚀
    Reply
    Report
  • Universe宇宙
    ·10-24
    @TigerGPT tell me if the recent 50 bps interest rate cut has help inflation to come back.
    Reply
    Report
    Fold Replies
    • TigerGPT: 

      Unfortunately, I couldn't find any specific news related to the recent 50 bps interest rate cut and its impact on inflation in the supplementary information. However, it is important to note that interest rate cuts generally stimulate economic activity and can potentially lead to increased inflation in the long term. Factors such as economic conditions, monetary policies, and market expectations also play a role in determining the relationship between interest rates and inflation.

      For more detailed and up-to-date information on the specific impact of the interest rate cut on inflation, I recommend referring to reputable financial news sources or conducting further research.

      10-24
      Reply
      Report
  • 北极篂
    ·10-24
    未来两周市场仍将面临震荡，这主要受全球宏观经济形势和政治不确定性影响。随着美国大选临近，避险情绪加剧，投资者往往倾向于降低风险敞口，推动市场中的抛售行为。尤其是风险资产，如股市，可能会因为不确定性而波动加剧。


    在此背景下，通胀和降息预期的变化对于美国国债收益率的影响至关重要。近期美国经济表现强劲，通胀压力依然存在，因此美联储可能会持续保持紧缩的货币政策。这可能使得投资者对于未来加息或延迟降息的预期增强，从而推动美国国债收益率上升。当收益率上升时，债券的吸引力增强，资金可能从股票等高风险资产转移至相对安全的债券市场，进一步加剧股市的回调压力。


    此外，美国财政部的举措也不可忽视。随着政府债务水平不断攀升，财政部将需要通过发售更多的国债来筹集资金。这种供应的增加可能对市场造成压力，推高债券收益率并引发市场的进一步调整。如果投资者担心债务问题以及政府的财政能力不足以应对未来的挑战，可能会选择减少风险资产的持有量，从而引发更大范围的市场回调。


    总体来看，在通胀、降息预期和财政政策的共同影响下，未来两周的市场波动性将继续存在，投资者需保持谨慎。对于那些追求稳健收益的投资者，转向国债或其他防御性资产可能是当前局势下的明智之举。然而，长期来看，市场依然会根据宏观经济数据和政策调整做出相应的反应，因此密切关注经济指标的变化至关重要。
    Reply
    Report
  • 北极篂
    ·10-26
    美国国债收益率触及4%确实引发了市场的广泛关注。较高的国债收益率往往意味着债券价格下跌，吸引资金流入债市，从而对股市等风险资产形成压力。因此，随着国债收益率持续上升，股市的估值可能会面临压力。


    然而，降息预期也在逐渐增强。如果美联储开始转向降息，这可能有助于降低债券收益率，提升债券价格，并缓解股市的下行压力。降息通常被视为支持经济增长的举措，能够鼓励企业借贷和投资，进而推升股市。


    不过，需要警惕的是，降息通常伴随着经济放缓的信号，市场可能对经济前景产生担忧，导致短期内股市波动加剧。因此，降息预期虽然在长期有利于市场，但短期内也可能会因经济不确定性带来调整。我认为市场是否会下跌，取决于美联储的行动速度以及市场对经济前景的解读。
    Reply
    Report
  • icycrystal
    ·10-26
    hopefully, yield won't go down too much, so can get higher [USD] [USD] [USD]

    According to the betting site Polymarket, Trump currently has a 64% chance of winning the November election, while Harris trails with a 36% chance.

    recent rise in the 10-year yield has nearly mirrored increasing speculation in betting markets that former President Trump will win the election.

    @koolgal @Shyon @Aqa @SPACE ROCKET @TigerGPT @GoodLife99 @Universe宇宙 @rL @LMSunshine @HelenJanet

    Will inflation and rate cut estimates change make US Treasuries yield higher?

    Will market pullback due to Treasury's forces?

    Leave your comments and also post to win tiger coins~

    Reply
    Report
  • Aqa
    ·10-28
    The inflation and rate cut estimates change are pushing US Treasuries yield higher. Some stocks’ prices has recently dropped showing signs that stock market pullback has occurred due to the expectations of treasury yields going higher. Thanks @Tiger_comments
    Reply
    Report
  • nomadic_m
    ·11-04
    The 10-year US Treasury yield has surged, driven by election-related trades and inflation concerns, amid growing speculation that former President Trump will win the election and potentially reignite inflation through his tax policies. This has led to a sell-off in interest-sensitive large-cap stocks. The market is expected to remain volatile due to pre-election risk aversion, with lowered expectations for a Federal Reserve rate cut by the end of the year.

    $iShares 20+ Year Treasury Bond ETF(TLT)$
    $NVIDIA Corp(NVDA)$
    $Apple(AAPL)$
    $Amazon.com(AMZN)$
    $Trump Media & Technology(DJT)$

    Reply
    Report