5 hrs ago
Bond Sell-Off Sends US Stock Futures Lower, Fed Bets Rise
US stock futures were falling before Wall Street opened.
Technology stocks were expected to be hit hardest, with Nasdaq futures down about 1%.
Bond prices fell, which pushed government bond interest rates higher.
Higher bond rates can make stocks less attractive to investors.
New economic reports showed that business activity was stronger than expected.
This made investors think the Federal Reserve might raise interest rates again.
Fed Governor Michael Barr said more rate increases may be needed to reduce inflation.
Investors also reacted to weak demand at a Treasury bond auction and changing oil prices.
Nasdaq futures fell 1%, while S&P 500 and Dow futures dropped 0.4% and 0.6%, respectively.
The 10-year US Treasury yield rose about 15 basis points to 5.11%, its highest level since 2007.
The two-year Treasury yield climbed more than 11 basis points to 4.889%, its highest level since May 2024.
Stronger-than-expected manufacturing and services data increased expectations for another Federal Reserve rate hike.
CME Group data showed the probability of an October quarter-point rate increase rising to 66.4% from 55%.
- Who
- US stock-market investors, the Federal Reserve, Fed Governor Michael Barr, and CME Group.
- What
- US stock futures fell as rising Treasury yields increased expectations of another Federal Reserve interest-rate hike.
- Where
- US financial markets and the US Treasury market.
- When
- Thursday’s trading session; the rate-hike probability rose on Wednesday.
- Why
- Stronger economic data, a weak five-year Treasury auction, elevated inflation, and comments from Michael Barr pushed yields and rate-hike expectations higher.
Key facts
- Nasdaq futures
- Down 1%
- S&P 500 futures
- Down 0.4%
- Dow futures
- Down 0.6%
- 10-year Treasury yield
- 5.11%, up about 15 basis points and at its highest level since 2007
- Two-year Treasury yield
- 4.889%, up more than 11 basis points and at its highest level since May 2024
- October rate-hike probability
- 66.4%, up from 55% a day earlier
- Federal Reserve inflation target
- 2%
Sources
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