The Treasury yields had their 6th day of continuous rising on 28th of September, 2021 to the top level since the month of June. The 10-year note may not be the topic of discussion in one’s group chat, the investors are going to pay complete attention to the matter as it sets the benchmark for the growth of the economy in future and the borrowing costs.
- A quick note. The yield of bonds shows an inverse movement to the prices, so the yields of the bonds increase when the investors sell the bonds.
What is the significance of the 10-year?
By selling the bonds off, the investors are preparing to wind down the stimulus economic measures of the Fed after the fall and a hike in the interest rate shortly.
The surging of the yield is also an indication that the high inflation could be lasting much longer than it is expected to. This reality was acknowledged by Fed Chair Jerome Powell yesterday on Capitol Hill.
Technical companies are to suffer hard
Despite all three main indexes that were tumbling yesterday, one was different from the rest of them. The most bruised was the tech-based NASDAQ compared to Dow or S&P.
- The top technology companies of Wall Street like Facebook, Amazon and Nvidia had lost above $200 billion in the market value.
The rising of yields is not necessarily dooming for the stocks. For the fact, currently, they are giving indications that an economy that is ‘more’ normal, the one that does not need government stimulus that is unprecedented is on its way.
However, the technical stocks which are of high growth might be taking a hit when the yields spike.
In the bigger picture: some of the watchers of the market had shown concerns about a choppy September and they were also proven right, the company the S&P are on its way to its first loss on a monthly basis since January.