5 hrs ago
Treasury Yields Climb as Stocks Rise on Tech Gains
US government borrowing costs went up on Monday.
This happened partly because new information showed that US service businesses were still growing.
At the same time, big US stock indexes also rose, helped by gains in Nvidia, Microsoft and Meta.
Jim Cramer said those large technology companies may be hiding pressure on the broader stock market from higher bond yields.
In France, investors were concerned about government debt and whether lawmakers would approve a budget.
Spanish bond yields rose as investors considered the uncertainty around a snap election.
Yields in both France and Spain had been even higher on Friday.
Investors are watching what happens next with interest rates, government budgets and elections.
The US 10-year Treasury yield rose to 5.326%, while the 30-year yield reached 5.683%, moving back toward multidecade highs.
Strong US services activity added to expectations that the economy can withstand higher interest rates; markets priced in no Federal Reserve rate change this month.
The Nasdaq Composite rose about 1% to a record, and the S&P 500 gained 0.66%, helped by Nvidia, Microsoft and Meta.
French 10-year yields rose amid concern over debt and a contested budget, while the France-Germany yield gap narrowed from Friday’s peak.
Spanish yields also rose as investors weighed a snap election scheduled for Nov. 29 after protests over housing costs.
- Who
- US, French and Spanish bond investors, along with US stock market investors.
- What
- US Treasury and European government bond yields rose while major US stock indexes also gained.
- Where
- The United States, France and Spain.
- When
- Monday; Spain's snap election is scheduled for Nov. 29.
- Why
- US economic strength and bond selling put pressure on yields; French budget concerns and Spanish election uncertainty also weighed on European bonds.
Reasons for optimism
Reasons for caution
Rising stocks despite higher yields
Reasons for optimism
The Nasdaq and S&P 500 rose, supported in part by gains in Nvidia, Microsoft and Meta.
Reasons for caution
Jim Cramer argued that a small group of major AI companies may be masking pressure on the wider stock market from higher Treasury yields.
What bond yields signal
Reasons for optimism
Strong US services activity was seen as evidence that the economy could withstand higher interest rates.
Reasons for caution
Cramer said the bond market could be a warning sign, as higher yields can weigh on defensive stocks and make bonds more attractive to income-seeking investors.
Key facts
- US 10-year Treasury yield
- 5.326%, up from 5.276% at Friday’s close.
- US 30-year Treasury yield
- 5.683%, up from 5.629%.
- US services PMI
- 54.9 in September, compared with 55.4 in August; readings above 50 indicate growth.
- Nasdaq Composite
- Rose about 1% to a record close on Monday.
- French 10-year yield
- Reached 4.993% on Friday, its highest level since 2002; stood at 4.873% in midday European trading Monday.
- France-Germany 10-year spread
- 140.44 basis points on Monday, after reaching 158.67 basis points Friday.
- Spain election
- Snap election called by Prime Minister Pedro Sanchez for Nov. 29.
Sources
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