Powell's speech, Treasury yields, SPR refill - what's moving markets
Investing.com — U.S. Treasury yields soar to the highest levels since the financial crisis after a speech by Fed chair Jerome Powell, dragging stocks lower. Crude rises as the U.S. looks to refill its strategic reserves, while U.K. retail sales slumped in September.
Jerome Powell offered something for everyone in his speech before the New York Economic Club on Thursday, leaving open the possible need for more rate hikes because the economy had proved stronger than expected, but also noting emerging risks and a need to move with care.
«A range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little,» he said.
«We will make decisions… based on the totality of the incoming data, the evolving outlook, and the balance of risks.»
Yields on the benchmark 10-year Treasury rose briefly to 5%, a level not seen since 2007, and stocks sold off, with the broad-based S&P 500 ending down 0.9%.
The recent surge in long-term bond yields suggests the market has embraced the idea that rates will remain higher for longer, with economic activity having proved to be more resilient to higher borrowing costs so far than many had predicted.
And these yields don’t look likely falling too much going forward as the supply of U.S. Treasuries can only increase with U.S. President Joe Biden asking Americans to spend billions more dollars to help both Israel and Ukraine.
The rise in U.S. yields has had repercussions elsewhere, with the Bank of Japan intervening in the Japanese government bond market on Friday for the fifth time this month after its 10-year yield pushed to a fresh decade high.
U.S. stock futures slipped lower Friday, on pace for weekly
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