Treasury Yields Surge Ahead of Record $70 Billion Bond Sale
In a volatile market environment, Treasury yields surged ahead of a record $70 billion sale of five-year notes, signaling potential shifts in investor sentiment. Despite a rally in tech megacaps, equities struggled to gain much traction as uncertainty loomed.
The hefty slate of bond supply this week will play a crucial role in determining the market’s direction, following four straight weeks of losses. Tesla Inc. led gains in megacaps, with CEO Elon Musk announcing plans to launch less-expensive vehicles. Chipmakers also saw a boost after a bullish forecast from Texas Instruments Inc. Meta Platforms Inc. is set to report results later in the day.
Treasury 10-year yields rose six basis points to 4.66%, while the S&P 500 hovered near 5,070. The Philadelphia Stock Exchange Semiconductor Index climbed 2%. The yen weakened beyond 155 per dollar for the first time in over three decades, raising concerns about potential market interventions by Japan. Oil prices whipsawed as traders weighed inventory data and geopolitical risks, with Israel reportedly striking around 40 Hezbollah sites in southern Lebanon.
Market experts like Katrina Dudley at Franklin Templeton emphasized the importance of delivering on earnings growth to sustain the S&P’s performance throughout the year. Interest rates remaining elevated, economic uncertainty, and geopolitical turmoil have dampened the appeal of some of the stock market’s cheapest strategies.
Investors have been pulling money out of value-based exchange-traded funds while pouring funds into growth stocks, despite concerns about a potential market downturn. Corporate highlights included Boeing Co. burning through cash in the first quarter, Amazon.com Inc. and Microsoft Corp. facing scrutiny over their AI investments, and AT&T Inc. beating profit estimates.
The market is also awaiting key events this week, including US GDP data, earnings reports from Microsoft, Alphabet, and Airbus, as well as Japan’s rate decision and economic forecasts. Overall, the market remains volatile, with investors closely monitoring developments in various sectors to navigate the uncertain landscape.
