Treasury bond yields have returned | Wilnesh News

On October 23, 2024, professional traders worked in the hall of the New York Stock Exchange (NYSE) in New York City, the United States.

Brendan McDermid | Reuters

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bottom line

Like an unpopular former partner who shows up at the most inopportune times and refuses to leave, Treasury yields have returned and taken center stage.

Yields have been rising over the past month 10-Year Treasury Bond Yields rose about four basis points to 4.25% on Wednesday. During U.S. trading hours, the 10-year Treasury yield hit 4.26%, the highest level since July 26.

This is happening despite the fact that the Federal Reserve cut interest rates by 50 basis points at its September meeting and said it would cut rates by the same amount further before the end of the year.

The market appears to have shifted from worries about a weak U.S. economy to worries about the U.S. economy being too strong.

The Federal Reserve’s “beige book“There has been a positive impact on the economy. Most regions in the U.S. “report lower worker turnover and layoffs remain limited,” while “contacts are more optimistic about the long-term outlook,” the report said.

Therefore, it is not inconceivable that a strong economy may prompt the Federal Reserve to slow down or even stop cutting interest rates.

“To me, it’s all about the impact of a rate hike,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management. “The market is re-pricing the possibility of a significant rate cut from the Fed.”

Stocks plunged as yields rebounded. this S&P 500 Index Down 0.92% Dow Jones Industrial Average Down 0.96% – the worst day in more than a month – Nasdaq Index down 1.6%.

But Paul Hickey, co-founder of Bespoke Investing Group, said investors need not panic. “It’s a tough day, but these days happen,” Hickey told CNBC. Wells Fargo believes stocks could still rise in 2025 despite near-term uncertainty.

While rising U.S. Treasury yields appear to be holding back stock market gains, like most uninvited visitors, they will likely retreat in time, and if profits remain strong, the market should resume its upward trend.