The continuing rout in yields on longer-term Treasury products has triggered fears of rivaling some of the most notorious market meltdowns in US history.
Ten-year US Treasury notes have plummeted 46 percent since March 2020, according to data compiled by Bloomberg.
That’s just shy of the 49 percent plunge in US stocks in the aftermath of the dot-com bust at the turn of the century.
The rout in 30-year bonds has been even worse, tumbling 53 percent, nearing the 57 percent slump in equities during the depths of the financial crisis, Bloomberg reported.
Stocks last suffered losses of that magnitude 15 years ago, when the collapse of Lehman Brothers and the 2008 financial crisis led to the benchmark S&P 500 index plunging 48 percent in the space of six months.
Bond yields soar as Fed holds rates
Investors’ belief that the Federal Reserve will hold interest rates at their current level well into 2024 in a bid to kill off inflation has led to bond yields, which move in the opposite direction to prices, soaring over the past two months, with the key 10-year yield approaching 5 percent, Business Insider reported.
Long-duration debt’s massive plunge has had a knock-on effect on stocks, with the S&P 500 and Nasdaq Composite each down around 7 percent since the start of August.
The Dow Jones Industrial Average has shed 2,500 points over the same period, wiping out all its gains year-to-date.
Even before the recent rout, bonds’ rough stretch since 2020 had wobbled major financial institutions, with Silicon Valley Bank collapsing in March after its disclosure of a $1.8 billion loss on its fixed-income portfolio led to customers pulling their money from the California lender.
There were some signs of relief Wednesday, though, with 10-year yields pulling back from 16-year highs after fresh private payroll data signaled a softer-than-expected jobs market.
Traders believe the figures could encourage the US Fed to wind down its tightening campaign early.
Follow us on
