The 10-year yield reached its highest level since August 2007.
Bond yields ticked higher Tuesday, with the U.S. 10-year note’s yield reaching its highest level since August 2007.
Bond yields and stocks tend to move in opposite directions, as higher interest rates weigh on future profits. Higher yields push down tech stocks especially, as their valuations are largely based on future profits. And indeed, the tech-heavy Nasdaq Composite was performing the worst of the three indexes, down 1.6%, while the Dow fell 1.1% and the S&P 500 was off 1.2% in afternoon trading.
“They are buying bills that are above 10yrs,” 22V analysts said. “That is a shift from last year when investors shunned bills and a hard landing and steep rate cutting cycle were assumed.” “Maybe China is behind the rise in U.S. long rates,” wrote Torsten Sløk, chief economist at Apollo Global Management on Tuesday. “Growth in China is slowing for cyclical and structural reasons, and Chinese exports to the U.S. are lower. As a result, China has fewer dollars to recycle into Treasuries.”
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