• January 28, 2023

10-year Treasury yield tumbles to 1% as stocks swoon

US Treasury bond yields fell Wednesday as global equity markets came under pressure ahead of the Federal Reserve’s update.

What are treasuries doing?

The yield on 10 year treasury bills
TMUBMUSD10Y, 1.015%
fell 3.7 basis points to 1.003% and briefly touched the key 1% level. The 2-year interest rate
TMUBMUSD02Y, 0.117%
pulled back one basis point to 0.115%. The 30 year bond yield
TMUBMUSD30Y, 1.772%
fell 3.9 basis points to 1.763%.

What drives Treasurys?

Port assets strengthened as US stocks posted heavy losses at the start of trading on Wednesday. Investors have feared signs of market foam suggesting stocks may need to be corrected amid brief shortages in some popular stocks like GameStop
GME, + 98.36%.

The S&P 500
SPX, -1.66%
and Nasdaq
COMP, -1.55%
were both down over 2% during the Dow Jones Industrial Average
DJIA, -1.64%
fell over 500 points.

Investors will also receive a political update from the Federal Reserve on Wednesday, followed by a press conference with Fed Chairman Jerome Powell. Any comments he makes on the recent surge in market bias Measures of inflation expectations and the schedule of purchases of its assets is closely monitored.

Member of the government council of the European Central Bank Klaas Knot said The ECB could cut rates on Wednesday if it had to offset the strength of the euro, which may counteract some accommodative measures taken by the central bank.

The 10-year yield on German government bonds
TMBMKDE-10Y, -0.552%
fell 2.8 basis points to minus 0.590%.

In US economic data durable goods up 0.2%Above all, this corresponds to the weakness in aircraft orders, which is not the 0.8% forecast by the analysts surveyed by MarketWatch.

What did the market participants say?

The yield curve flattening could persist for the next month amid strong foreign demand and lack of economic stimulus. There is a short-term risk that the US 10-year rate of return will exceed the 1% rate of return, ”said Arnim Holzer, macro and correlation defense strategist at EAB Investment Group.

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