On Thursday, stocks declined under pressure from rising Treasury yields as investors worried about further evidence of ongoing US inflation.
The S&P 500 was down almost 0.7% while the Dow Jones Industrial Average down 194 points, or 0.6%. The Nasdaq Composite fell 0.8% or so. On track to end their four-day winning streak are the indices.
On the strength of Thursday’s new inflation statistics, Treasury yields increased. The standard 10-year rate increased by over 11 basis points to 4.707%. The 2-year Treasury yield increased by more than 6 basis points to trade at 5.06%.
Recently, yields reached a 16-year high, which shook equities. The 10-year Treasury yield rose above 4.8% earlier this month.
Some investors think higher yields are likely to stay, which may have contributed to Thursday’s decline in the share market.
“The underlying assumption that we would eventually reach 2% inflation is undermined by every [CPI] report that comes in when it shows more stickiness. The bond market still wants to think we will achieve or come close to 2% inflation, but we won’t, according to Phillip Colmar, managing partner and global strategist at MRB Partners. The market “realises that yields will move higher,” he added, adding that stocks are still declining.