US Treasury yields at highest level since financial crisis - insight from a financial expert

US Treasury yields at highest level since financial crisis - insight from a financial expert

According to a report by Investing.com, U.S. Treasury yields rose to their highest level since the financial crisis following Fed Chairman Jerome Powell's speech. This led to a fall in stock prices. At the same time, the price of crude oil has increased due to the increase in US strategic oil reserves. In addition, retail sales in Great Britain collapsed in September.

In his speech, Powell left open the possibility of further interest rate increases because the US economy is more robust than expected. However, he also pointed out emerging risks and emphasized the need for continued cautious monetary policy. After his speech, 10-year U.S. Treasury yields briefly rose to 5%, a level last seen in 2007. This led to a decline in the stock market, with the S&P 500 being the biggest daily loser.

The rise in yields on long-term bonds suggests that the market expects interest rates to remain at higher levels for longer. Bond yields also may not fall significantly in the near term as the supply of U.S. Treasury bonds will increase as U.S. President Joe Biden spends additional billions of dollars supporting Israel and Ukraine. This development is also affecting other markets, such as the Japanese bond market, where the Bank of Japan has intervened for the fifth time this month.

Fed Chairman Powell's speech had a direct impact on US stock futures, which are expected to close in the red. Investors are worried about rising bond yields and the potential impact of the conflict between Israel and Hamas. Major US indices closed in the red yesterday as the 10-year US Treasury yield hit its highest level since the financial crisis.

In the UK, retail sales collapsed in September. They fell by 0.9% compared to the previous month, while a decline of 0.2% was expected. This is attributed to continued pressure on the cost of living and unseasonably warm weather. The economic difficulties also have an impact on politics, as the ruling conservative party is increasingly losing support among the population.

The debt crisis in China's real estate sector has taken another step into the unknown after China Evergrande Group said it had revised the terms of a proposed offshore debt restructuring. However, no details were given. Rival Country Garden has also missed the repayment of a bond, meaning there is a risk of default here too. This could further worsen the real estate crisis in China and worsen the prospects for a sustainable recovery of the Chinese economy.

The price of crude oil has risen due to geopolitical tensions in the Middle East and US plans to replenish its strategic oil reserves. This could end the trading week on a positive note. Reports of an explosion at a hospital in Gaza and the expected ground invasion by the Israeli army have heightened fears of a widening conflict in the oil-rich region. The US has also unveiled two separate offers to purchase crude oil to replenish its strategic oil reserves. In total, the US has withdrawn around 200 million barrels from its strategic oil reserves since the beginning of 2022, which is the lowest level in almost 40 years.

The above events and developments have an impact on the market and the financial industry. The rise in U.S. Treasury yields could lead to increased volatility in markets and affect yields in other countries. Rising bond yields could lead investors to invest more in bonds and turn away from stocks. The negative impact on stock markets could lead to a decline in investor confidence. The collapse in retail sales in the UK reflects the economic difficulties faced by consumers in the country. This could have an impact on consumption and confidence in the economy. The debt crisis in the Chinese real estate sector is a significant one