Rising Treasury yields caps global stocks; traders weigh tariffs, Fed rate cuts By Reuters

By Chibuike Ogu and Alun John

NEW YORK/LONDON (Reuters) – A global bond selloff continued on Wednesday, weighing on Wall Street shares and boosting the dollar as signs of continued strength in the U.S. economy dampened expectations of aggressive short-term rate cuts.

The benchmark rose to 4.73%, the highest since April 2024, based on Tuesday’s 7 basis points gain.It was last up 0.2 basis points at 4.687%.

On Wall Street, the benchmark traded lower for most of the session, but the Dow also closed higher and the Nasdaq was lower, with gains in the healthcare, materials, real estate and industrials sectors. The biggest losses were communication services and energy.

Bond selling accelerated on Wednesday after a CNN report said US President-elect Donald Trump was considering declaring a national economic emergency to provide legal justification for a series of sweeping tariffs on allies and adversaries.

“Ever since Trump became president-elect, interest rates just keep going up,” said Bill Strazullo, chief market strategist at Bell Curve Trading in Boston “All his policies, whether it’s tariffs, tax cuts or deportations, they’re all inflationary.”

Up 0.25% to 42,635.20, the S&P 500 rose 0.16% to 5,918.25 and fell 0.06% to 19,478.88.

European shares fell, with pan-European shares down 0.2% and most regional bourses also in the red.MSCI’s benchmark of shares globally fell 0.12% to 845.95.

European government bond yields rose and the yield on Germany’s benchmark 10-year note hit a nearly six-month high 4.82%, the highest since 2008.

Strong U.S. economic data weighed on U.S. Treasuries in recent weeks, with investors reducing expectations for a rate cut by the Federal Reserve.

In 2025, markets are fully pricing in just one 25 basis point rate cut, and see about a 60% chance of a second.

Investors will look to Friday’s more comprehensive nonfarm payrolls data after Wednesday’s data showed lower-than-expected growth in private wages and jobless claims.

“One thing I worry about is that these bonfires of rising yields tend to reinforce each other, especially at times like this,” said Michael Purves, CEO and founder of Tallbacken Capital Advisors. that you can buy a 10-year Treasury at 5% with zero risk, and that’s a higher return than the S&P 500, which is an asset allocation will raise many questions related to

The U.S. dollar, which measures the greenback against a basket of currencies including the yen and euro, rose 0.29% to 109.02, while the euro was down 0.23% at $1.0315 :

Oil prices were weighed down by a stronger dollar last week, with U.S. crude falling 89 cents, or 1.16%, to $76.23 a barrel %, reaching 73.32 dollars.

Gold prices have increased. rose 0.51% to $2,662.90 an ounce.U.S. was up 0.3% at $2,672.40.

“Going into this first quarter that we’re in right now, aside from earnings, I think it’s a big risk for stocks if bond yields hit 5%,” said Mark Malek, chief investment officer at SiebertNXT in New York. : “Buyers will be a little more reserved. So the people who were feeding the market higher will weaken.”