Rising yields put pressure on stocks, dollar stretches higher

September 26, 2023 05:15 PM AEST | By Invezz

Rising yields put pressure on stocks, dollar stretches higher — Image source: Invezz

Long-dated bonds got hammered on Monday

It was a Monday to remember for bondholders as they were squeezed aggressively. In particular, long-dated bonds got hammered.

For example, the 100-year Austrian government bond price plunged to 63.3 – an all-time low. Also, the iShares 20 Plus Year Treasury Bond ETF plunged, continuing its yearly decline, now down over -12% YTD.

Moreover, the 10-year yields keep rising, trading above 4.54% yesterday – the highest level since 2007.

Given the bond market’s blood bath, stocks are also under pressure. However, stocks did not drop yesterday as they usually do when bond prices fall that much. It could be just a coincidence, but this is a sign that maybe bonds have reached a bottom.

In any case, picking a bottom is difficult for anyone involved in financial markets.

Central banks may have come closer to the peak of the tightening cycle via interest rate hikes, but other tools keep tightening financial conditions. For example, quantitative tightening is ongoing in most of the advanced economies.

To sum up, bond prices rule the markets for now. Unless we see a change in the trend, this week may bring an ugly end to the trading month.

The post Rising yields put pressure on stocks, dollar stretches higher appeared first on Invezz

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