The unrelenting climb in Treasury yields triggered broad losses in US equities Tuesday, leaving the S&P 500 Index and Nasdaq Composite at four-month lows.  The 10-year Treasury note yield, which has been marching steadily higher since August, topped 4.80% yesterday – a level not seen since 2007.  The rise reflects mounting concerns that the Federal Reserve’s “higher-for-longer” interest rates could be with us much longer than previously anticipated.  The proximate cause of Tuesday’s surge higher may have been a stronger-than-expected labour market reading released earlier in the day, which boosted expectations that another interest rate hike could be in store this year.  The S&P 500 was down 1.4%, the Dow Jones Industrial dropped 1.3%, while the Nasdaq Composite fell 1.9%.  The main European equity indices were also lower by around 1% yesterday, with the Euro Stoxx 50 Index closing at its lowest level since 24th March. 

Summary for 04.10.2023 

  • Asian shares sank to 11-month lows on Wednesday after another piece of resilient US economic data sent Treasury yields to fresh highs, while a sharp rise in the yen had traders speculating that Japanese authorities stepped into the market.  Shares in Australia, Japan, South Korea, and Hong Kong all declined.  Markets in China remain shut for a week-long holiday. 
  • European equities look set to extend their recent decline this morning while US equity futures were little changed after the Dow Jones Industrials turned negative for 2023. 
  • Oil rose in early Asian trade this morning, supported by tightening global crude supply ahead of a panel meeting of OPEC+ ministers, where it is expected to keep output policy unchanged. 
  • The US dollar marched to a 10-month top against the euro at $1.0448 earlier today and a seven-month peak on sterling at $1.2053. 
  • A handful of Republicans in the US House of Representatives on Tuesday ousted Republican Speaker Kevin McCarthy, as party infighting plunged Congress into further chaos just days after it narrowly averted a government shutdown.  The 216-210 vote market the first time in history that the House removed its leader, with eight Republicans voting with 208 Democrats to remove McCarthy.  McCarthy told reporters he would not make another run for speaker. 
  • The number of job openings in the US rose by 690,000 from the previous month to 9.6 million in August, well above the market consensus of 8.8 million and indicating a robust labour market despite the Fed’s unprecedented monetary policy tightening measures. 
  • Airbnb fell 7.2% yesterday after KeyBanc downgraded the share to “sector weight” from “overweight,” citing the possibility the company’s margins had reached a near-term peak and revenue growth could decelerate. 
  • HP gained 1.8% on Tuesday after Bank of America upgraded the computer maker’s shares to “buy” from “underperform,” citing an improving outlook for the PC market and expectations the company’s cashflow problems hit their bottom in the company’s 2023 fiscal year.