Treasury yields soared yesterday, putting pressure on global stock markets. Some investors believe that the end to the climb in bond yield is near and await to see if Jerome Powell will mention it in his statement tomorrow. Today, investors are eager to see the earnings results of Microsoft and Alphabet.
The rise of bond yields could be coming to an end
Global stock markets started the week with losses as Treasury yields soared and investors await earnings reports from big tech companies this week.
US 10-year Treasury yields briefly surpassed 5% during yesterday's session, putting strong pressure on stocks. Although there are already voices among well-known investors who see the end of this escalation in bond yields, especially if the current geopolitical tension continues, which could lead to the purchase of bonds in search of safe haven assets.
In fact, following statements yesterday by investor Bill Ackmann announcing the closing of short bond positions that he has held since August, the yield on the 10-year bond fell more than 10 bps.
The remarks that the Federal Reserve’s (Fed) president, Jerome Powell, may make in this regard tomorrow – Wednesday - will also be important.
Therefore, volatility in fixed income is high and will continue to be the main fundamental factor that influences the market.
Earnings season continues today with Microsoft and Alphabet
Investors are also anxious as they await this week's corporate results. These will include a group of technology stocks whose gains are what have driven the S&P 500 higher this year.
Microsoft and Alphabet will report their results today, followed by Meta on Wednesday and Amazon on Thursday.
Any negative findings might have a significant impact on a wide range of companies as those stocks, along with Apple, Nvidia, and Tesla, have contributed most to the S&P 500's 10% gain so far this year.
The price of oil fell slightly
In the commodity market, oil fell slightly because Israel appears to be postponing a broader land invasion of Gaza. This move has stopped the situation from escalating further but tension remains high.
USA500 monthly chart, October 24, 2023. Source: CAPEX.com WebTrader.
Key Takeaways
- Global stock markets continue to feel pressure.
- Treasury yields keep on soaring.
- An end to the escalation in bond yields could be near, according to some investors.
- Fed chief, Jerome Powell, could refer to bond yields tomorrow in his speech.
- Microsoft and Alphabet will report today.
- Meta will report on Wednesday, followed by Amazon on Thursday.
- Any negative data from these reports could influence the S&P 500.
- Oil dropped slightly as Israel postpones further invasion of Gaza.
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Sources: Bloomberg, Reuters
