Treasury bond markets suffered another wave of volatility on Friday, halting a rally in technology after President Joe Biden said the US aimed to make vaccinations available to every adult in early May.
The yield on 10-year US Treasuries rose above 1.6 percent, up from about 1.54 percent on Thursday as investors sold the debt. It’s now near the 13-month high it hit during a choppy session a week ago. The interest on the 10-year British gilt rose by 0.09 percentage point to 0.82 percent.
The technical rally that drove US indices to record highs was thrown off course on Friday. The blue-chip S&P 500 index lost 0.4 percent at the opening bell, while the technology-focused Nasdaq Composite lost 1.4 percent.
The region-wide Stoxx Europe 600 fell 0.4 percent during afternoon trading, while the FTSE 100 in London rose 0.3 percent and the Xetra Dax in Frankfurt fell 0.6 percent.
The latest shock of market jitters came after Biden said every American adult would qualify for a Covid-19 vaccination on May 1, announcing “ some real progress ” in America’s fight against the pandemic in a televised address. The US President set the 4th of July holiday on Independence Day as a new goal for a return to normalcy.
Bond markets have been volatile in recent weeks, expecting a rapid US economic recovery to fuel inflation, eroding the value of bond interest payments. Those bond market nerves have spilled over into stocks.
Biden’s $ 1.9 billion stimulus bill and the European Central Bank’s pledge to accelerate the bond buying program have created “a wall of money like we haven’t seen since World War II,” Didier Rabattu said. head of shares at Lombard Odier asset management. “The Nasdaq is made of growth companies, it’s a pretty volatile index. In this environment, when interest rates rise, investors are repeating the value of growth.”
Analysts also point out that the supply of large corporate debt is contributing to the weakness of government bonds.
“The current background is that many non-interest investors are becoming aware of their exposure to interest rate risk and the natural way to respond is to hedge that risk,” said Antoine Bouvet, senior interest rate strategist at ING. “In the current environment, I think business deals weigh more heavily on US Treasuries.”
In Asia, China’s CSI 300 index closed at 0.4 percent, Hong Kong’s Hang Seng fell 2.2 percent and South Korea’s Kospi fell 1.4 percent.