At the lowest point of the day on Thursday, the Dow Jones was down 400 points. The index recovered more than half of that loss to end 170 points lower. The S&P 500 and Nasdaq, both of which were down nearly 0.7% each in early trading on Wall Street, recovered all of their losses to end at the flat line.
Futures this morning are trading with modest losses.
US Bond Markets Continue To Sell-Off
Pressure continued to mount on the US bond markets with a further jump in bond yields. The yield on the 10-year note jumped to 5.21%, the highest since 2007 and has jumped over 20 basis points in just two sessions.
The 30-year bond yield is now nearing the mark of 5.5%, which is the highest level since 2004.
On Thursday, the Treasury Department carried out yet another bond buyback program, where it accepted bonds worth $4.1 billion, again less than the maximum buyback limit of $6 billion, similar to what transpired on September 10. Thursday’s buyback operation was targeted at 20 and 30-year bonds.
Similarly, a seven-year bond auction received demand that was less than anticipated, despite a yield of 5.085%, the highest on record since the note was introduced in 2009.
With this sell-off, the 30-year fixed mortgage rate, which generally follows moves in the 10-year yield, jumped to 7.45%, while pre-war levels stood at 5.99% in late February this year.
Analysts at JPMorgan believe that there is scope for yields to rise further as energy-driven inflation, heavy government borrowing and risk of further monetary policy tightening weigh on sentiments.
According to bond market data cited by Bloomberg, the average yield on government debt globally is now near 4%, the highest since 2007.
Crude Oil Prices Remain Higher
Crude oil prices continue to remain at elevated levels despite conflicting reports emerging from either side of the globe.
On one side, Bloomberg and Reuters reported that US and Iran negotiators are working towards a phased deal in which the US will remove the naval blockade of Iranian ports, and Iran, in turn, will reopen the Strait of Hormuz.
On the flip side, Houthis claimed that they attacked a Saudi Aramco facility in Yanbu and a sensitive target in Riyadh using ballistic and cruise missiles, along with drones.
Saudi’s defence forces said that six ballistic missiles fired towards Yanbu Port and the city of Taif, were intercepted on Thursday.
Brent crude prices remain around the $105 to $106 a barrel mark, while West Texas Intermediate, or the US crude variant remains near the mark of $95 a barrel.