Jamie McGeever
9 min read
By Jamie McGeever
ORLANDO, Florida (Reuters) - TRADING DAY
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
U.S. debt despair
Investors' unease about holding long-dated sovereign debt was magnified by a soft 20-year U.S. Treasury note auction on Wednesday, which slammed the dollar and stocks, pushed long bond yields higher and steepened the U.S. yield curve.
In my column today I take a closer look at the rising term premium on U.S. debt. How much higher can it go? More on that below, but first, a roundup of the main market moves.
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If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
1. Weak U.S. economic outlook persists despite brief tradetruce with China 2. What's in the Republican tax and spending plan? 3. Target cuts annual forecasts as tariff pressure mounts,demand slows further 4. Japan's portfolio reshuffle raises red flag for U.S.:Mike Dolan 5. UK inflation jumps in April, raising prospect of BoErate cut delay
Today's Key Market Moves
* Wall Street slides across the board, with the S&P 500losing 1.6%, the Nasdaq 1.4%, the Dow 1.9%, and the Russell 2000small-cap index shedding 2.6%. * Treasury yields surge as much as 13 bps at the long end ofthe curve - 10-year yield scales 4.60%; 20-year and 30-yearyields hit 4.13% and 5.10%, respectively, both the highest sinceOctober 2023. * Another down day for the dollar, as the dollar index falls0.5%, with the euro, Aussie dollar and yen the big winners. * The Japanese yen rallies for a seventh consecutive day, awinning streak last seen in March 2017. * Bitcoin rises to a record high just shy of $110,000,before easing back after the soft U.S. 20-year bond auction.
Bond alarms ring louder
After a poor 20-year government bond auction in Japan on Tuesday, it was the turn of a weak sale of 20-year U.S. debt on Wednesday to cast a cold, dark shadow over world markets and put investors on the defensive.
The trouble is, when supposedly safe-haven sovereign bonds are at the root of the deepening market angst, the selloff takes on a more worrisome significance. And when it's U.S. Treasuries specifically, the cause for concern is even greater.
