U.S. Treasury yields are rising and stocks are falling as investors look for new clues on the future direction of interest rates.
The benchmark 10-year Treasury yield is currently at 3.976% and closing in on the 4% mark again. At the same time, the two-year Treasury yield was last trading at 4.349%.
Yields and prices have an inverted relationship and move in opposite directions.
The rise in bond yields comes as investors await the first batch of economic data out of the U.S. for the New Year, which includes the monthly labour market report.
Minutes from the U.S. Federal Reserve’s latest meeting are due out later today (Jan. 3) and are expected to shed light on what the central bank expects for interest rates in the year ahead.
The Fed minutes may also provide insights into the central bank’s expectations for the overall economy, including inflation and whether a recession can be avoided in America.
Fed Chair Jerome Powell said in December that he expects three interest rate cuts this year, news that sparked a stock market rally.
However, with Treasury yields once again rising, it has led stocks to fall to begin the year, with all the major U.S. indices finishing in the red on the first trading day of 2024.
The technology-laden Nasdaq index had its worst day since October of last year to kick-off the year, falling nearly 2% in one day. The S&P 500 and Dow Jones Industrial Average also declined.
