Can Markets Weather the Storm of Soaring Yields?
Auction Overview
The latest 20-year U.S. Treasury $U.S. 20-Year Treasury Bonds Yield (US20Y.BD)$ auction revealed troubling signs of weakening demand, with the bid-to-cover ratio dropping to its lowest level in 22 years. This lackluster performance triggered a broader market sell-off, as investors grappled with rising yields. The 30-year Treasury yield surged past 5% $U.S. 30-Year Treasury Bonds Yield (US30Y.BD)$ , approaching its Q4 2023 peak, while the 10-year yield $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ reached an intraday high of 4.61%, reflecting heightened market sensitivity to fiscal and monetary developments.
Key Market Concerns
The proposed U.S. budget bill is raising alarms, as it is expected to widen the fiscal deficit significantly. This prospect is driving mid-to-long-term yields higher, exacerbating concerns about debt sustainability and inflation. Investors are increasingly wary of the fiscal trajectory, with implications for both fixed-income and equity markets.
Can Rapid Rate Cuts Save the Market?
With a resilient labor market showing no signs of immediate weakness, expectations for Federal Reserve rate cuts have been pushed further out. Market consensus now points to September 2025 or later for the first cut, with Goldman Sachs projecting a potential move in December 2025. The absence of near-term monetary easing is adding pressure to bond yields and complicating the outlook for risk assets.
What Pressures Are Weighing on the Stock Market?
Rising yields, particularly above the 4.2% threshold (currently at 4.5%), are weighing on stock valuations by increasing discount rates in valuation models. Additionally, Q2 corporate earnings growth is expected to slow due to new tariffs and softening consumer spending. This follows a robust Q1, where profits grew 12% against expectations of 6%, highlighting a potential shift in market dynamics. $S&P 500 Index (.SPX.US)$ $Nasdaq Composite Index (.IXIC.US)$ $Dow Jones Industrial Average (.DJI.US)$
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Gold has rebounded to $3,300! It's time to get on board?
🎙️ Discussion: 1. Has it $Gold Futures (AUG5) (GCmain.US)$ rebounded to $3,300? Will the short-term trend continue to rise? 2. What factors
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May 6 20:45
S&P 500's Put/Call Ratio Hits 5-Year Low: Fear Fades and Bottom Near?
Anna 72344231 : Cannot understand.
105742796 Learner :
Jose_flyingpanda_ : That wasn’t Market growth that was hoarding
Susan Brylski : I think the fed will step in and buy bonds like they always did
105495313 Susan Brylski : Yeap. By printing more money therefore inflation therefore USD will plummet more.
101731590 : US market is bad. Investors should diversify their investment to China,since the Chinese stock is really cheap, cheaper than.all the rest
74128907 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
103911561 105495313 : actually they already done…
thoughtful Bat_8163 101731590 : I prefer not to say anything bad about China, but no soccer and never stock market, which is even worse than casino
BelleWeather : Not to mention the burgeoning dictatorship in which mid-income earners are generationally enslaved and lower income citizens simply suffer and die…
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