30-year yield climbs to 5.612%, highest since 2002

10-year yield hits post-2007 high for 8th time this month, dampening investor sentiment

[Reuters/Yonhap]
[Reuters/Yonhap]

All three major US stock indexes closed slightly lower Tuesday (local time) as rising long-term Treasury yields weighed on Wall Street.

The Dow Jones Industrial Average fell 131.59 points, or 0.26 percent, to close at 51,349.92. The S&P 500 dropped 12.85 points, or 0.17 percent, to 7,670.84, while the NASDAQ Composite slipped 22.84 points, or 0.09 percent, to 26,797.54.

There was no single major catalyst driving the market, but the continued rise in US Treasury yields acted as a drag on equities.

The 30-year Treasury yield climbed as high as 5.612 percent during trading, its highest level since June 2002. The 10-year yield also rose to 5.265 percent, marking its eighth post-2007 high this month.

Oil prices fell sharply after reports that Saudi Arabia had resumed crude exports through the Red Sea. West Texas Intermediate for November delivery settled at $89.38 per barrel, down 3.48 percent, while Brent crude futures dropped 2.56 percent to $102.59 — their lowest levels since Aug. 31 and Sept. 22, respectively.

Despite the drop in oil prices, inflation concerns lingered as tensions in the Middle East showed no signs of easing.

Remarks from senior Federal Reserve officials also heightened market caution.

New York Fed President John Williams said one additional interest rate hike this year may be appropriate to bring inflation under control. He added, however, that further action was not urgent following this month's benchmark rate decision.

Markets focused on the timing of any additional rate increase in response to Williams' comments. Krishna Guha of Evercore said, "We interpret this as most consistent with a scenario of skipping October FOMC and hiking in December."

Fed Governor Michael Barr again warned that monetary policy would likely need further adjustment to bring inflation down in a timely manner, calling price stability the top priority.

Economic data released that day also pointed to a slowdown. The Conference Board's consumer confidence index for September came in at 81.9, falling short of market expectations and hitting its lowest level since 2014.


kacew@heraldcorp.com