U.S. Treasury yields rose again, hitting a 16-year high. As the market benchmark 10-year maturity interest rate exceeds 4.8%, anxiety over interest rates is spreading, with U.S. mortgage loan interest rates approaching 8%. The major New York stock market indices also fell on the 3rd (local time) due to a surge in government bond interest rates due to concerns about prolonged high interest rates.
On the 3rd (local time), the interest rate on 10-year U.S. Treasury bonds soared from 4.682% on the previous day to 4.801% on this day, breaking the highest since August 2007. The 30-year maturity government bond interest rate also hit 4.95% for the first time since 2007. Accordingly, the interest rate on 30-year mortgage loans also rose to 7.72%.
The two-year maturity rate, which is sensitive to the Federal Reserve interest rate, was 5.145%, a slight increase compared to the previous level of 5.110%. The strength of long-term government bond yields is believed to be because the market believes that the Fed’s interest rate hike will remain high for a long time, even though the Fed’s interest rate hike is coming to an end.
The August job announcement announced on this day was higher than market expectations, prompting the Federal Reserve’s warning about high interest rates. The number of job postings in the U.S. in August was 9.61 million, an increase of about 690,000 from the previous month and significantly exceeding the market forecast (8.8 million). An overheated job market can put pressure on inflation. Atlanta Federal Reserve Bank President Raphael Bostic, who is classified as a dovish member of the Federal Reserve, argued that the Federal Reserve should maintain the current interest rate of 5.25-5.50%, but said, “I think it is appropriate to maintain (the interest rate) for a long time.” In other words, it contributed to the trend of prolonged high interest rates within the Federal Reserve.
The high interest rates on U.S. Treasury bonds, which are approaching $25 trillion, are affecting global stock markets, including the New York Stock Exchange, and foreign exchange and bond markets. On this day, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average ended trading at 33,002.38, down 430.97 points (1.29%) from the previous day. This was the worst decline since March of this year, with the Dow giving up all of its gains this year. The Standard & Poor’s (S&P) 500 index closed at 4,229.45, down 58.94 points (1.37%) from the previous day, and the Nasdaq index closed at 13,059.47, down 248.31 points (1.87%) from the previous day.
Amid concerns that the U.S. high interest rates will remain in place for a long time, the dollar also strengthened, and at one point during the day, the yen-dollar exchange rate exceeded the ‘psychological resistance level’ of 150 yen per dollar. This is the first time since October last year. Russia, which is trying to prevent a fall in the value of its currency by sharply raising interest rates, also raised alarm bells as the value of the ruble exceeded 100 rubles per dollar.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.