From stocks to bitcoin, soaring US yields cast shadow over risk asset rally
Treasury yields are sending shudders through riskier areas of the market, leaving investors to wonder how badly it will dent a rally that has lifted everything from stocks to bitcoin this year.
Strong economic growth has spurred expectations that the Federal Reserve will leave rates higher for longer, pushing Treasury yields this month to their highest levels since 2007. That climb has made them harder to ignore for holders of stocks and other speculative assets, which have rallied for most of the year even as yields moved steadily higher.
The S&P 500 has lost 4% this month as the U.S.
benchmark 10-year Treasury yield climbed to a more than 15-year high of 4.35% on Monday. Meanwhile, the S&P 500 technology sector has dropped 5.7%, bitcoin has fallen over 10% and the ARK Innovation ETF — a bastion of many high-growth names — has dropped 18.5%.
Stocks were broadly higher on Monday, with the S&P 500 up 0.7% on the day.
Higher Treasury yields — which move inversely to bond prices — can take the shine off speculative assets by offering investors attractive payouts on an investment seen as basically risk free because it is backed by the U.S. government.
