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

Tiger_comments
10-24
Reward Tiger-CoinsReward 500 Tiger-coins

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?
With $.SPX(.SPX)$ recently surpassing the 6,000 point, major institutions have expressed optimism about the U.S. stock market's outlook for next year: Morgan Stanley: Set a base-case year-end 2025 target for the S&P 500 at 6,350 points, with a bullish scenario target of 7,400 points. ---------- Will you still invest in US stocks despite of high valuations and low risk premium? Can $.SPX(.SPX)$ hit 6500 as analysts suggest?
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.
Reward expired
180 tiger-coins have been distributed to 13 participants
Deadline to 11/14 15:24
Reward-post

Comments

  • Shyon
    10-24
    Shyon
    Win 50 Tiger-coins
    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

    • 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.

    • Shyon: 
      Come and join yo @koolgal @rL @icycrystal @b1uesky @Universe宇宙 @Barcode @nomadic_m @GoodLife99 @Fenger1188
  • MHh
    10-24
    MHh
    Win 15 Tiger-coins
    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.
  • Success88
    10-24
    Success88
    Win 15 Tiger-coins
    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.
  • Cadi Poon
    10-24
    Cadi Poon
    Win 5 Tiger-coins
    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。

  • TimothyX
    10-24
    TimothyX
    Win 5 Tiger-coins
    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。

  • WanEH
    10-24
    WanEH
    Win 10 Tiger-coins
    I think us federal will continue with the rate cut in future. and it will cause market become volatile.
Leave a comment
16
11