Inflation Concerns Drive Bond Yields to 2024 Peaks: Market Overview

 

As Wall Street anticipates the upcoming consumer price index release on Wednesday, bond yields have surged, marking a 2024 high amid easing geopolitical tensions and anticipation of crucial inflation data.

The bond market saw a downturn at the start of the week, with 10-year Treasury yields reaching their highest point since November, nearing the critical 4.5% mark. This level is closely watched by investors, as it may signal whether interest rates could reach last year’s peaks again. The market’s earlier expectation of three Federal Reserve rate cuts has shifted, now leaning towards just two reductions this year. “US core inflation post the recent solar eclipse will play a crucial role in shaping market expectations regarding a potential rate cut in June,” note Morgan Stanley analysts, including Matthew Hornbach.

The yield on 10-year US Treasuries climbed by two basis points to 4.43%. Meanwhile, the S&P 500 stayed close to 5,200 points. Energy stocks dropped alongside oil prices following Israel’s announcement of troop withdrawals from Gaza. Major tech stocks showed mixed performance, with Nvidia Corp. experiencing a decline and Tesla Inc. gaining 5%. Bitcoin’s value surpassed $71,000.

Corporate Highlights:

  • Tesla Inc. (TSLA) is set to introduce its much-anticipated robotaxi amid declining sales and increased competition from affordable Chinese electric vehicles.
  • Companies linked to cryptocurrencies saw a rise in shares as Bitcoin’s  (BTC-USD) value exceeded $71,000, continuing its upward trend.
  • 99 Cents Only Stores LLC filed for bankruptcy, following its announcement to cease business operations in April.
  • Blackstone Inc. (BX)  has entered a deal approximately worth $10 billion to purchase an apartment landlord, highlighting its investment interest in the property market by acquiring Apartment Income REIT at a 25% premium.
  • Spirit Airlines Inc. (SAVE)  is implementing a comprehensive cost-reduction strategy after its merger with JetBlue Airways was halted by antitrust issues.
  • The US government intends to support Taiwan Semiconductor Manufacturing Co. (TSM) with $6.6 billion in grants and up to $5 billion in loans for the construction of Arizona factories, part of President Joe Biden’s initiative to increase domestic critical technology production.
  • Alibaba Group Holding Ltd. (BABA) reduces cloud service prices significantly, from the US to Singapore, as it strives to maintain competitiveness and stimulate growth in its cloud computing division.”

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Inflation Concerns Drive Bond Yields to 2024 Peaks: Market Overview

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