Original title: us debt stocks plummet, two big investment banks judge that the Federal Reserve will step in
Yields on 10-year Treasuries jumped on Thursday, putting pressure on stocks.The index (Nasdaq) suffered its biggest one-day decline since October. The surge in global yields and the collapse in stock markets have made bond and equity investors lingering fear of losses. Wells Fargo & CoAnd Bank of America CorporationAnalysts believe the Fed will have to act to deal with this huge volatility, and the release of two indicators later today may provide further guidance to the market.
Us Treasury debt jumps, Federal Reserve Policy attracts attention
On Thursday, the yield on 10-year US Treasuries jumped more than 16 basis points to 1.614 per cent, the highest level since February 2020 and up more than 0.5 percentage points from the end of January. The move unnerved investors and put pressure on the stock market, with the Nasdaq suffering its biggest one-day fall since October.
The surge in yields on 10-year government bonds, the benchmark for mortgage rates and car loans, has been driven by expectations that economic conditions will improve with the introduction of COVID-19 's vaccine and fears of rising inflation. The U.S. House of Representatives will approve a $1.9 trillion epidemic relief stimulus package by Friday, raising expectations of an economic recovery.
However, strategists at Wells Fargo said on Thursday that they believed:
"there has been an increase in the likelihood that the Fed will take action to try to hold down interest rate increases in the near future."
Meanwhile, Hans Mikkelsen, Bank of America Corporation's credit strategist, says economists have underestimated the extent of economic growth since the summer. He thinks:
"the Fed's dovish policy may not last long, and this shift could lead to a widening of credit spreads."
The following recent data may guide the market:
Us personal consumption expenditure data for January, to be released at 21:30 Beijing time tonight, track changes in the cost of consumers buying goods and services and are the Fed's preferred indicator of inflation.
The University of Michigan (University of Michigan) will release the final US consumer confidence index for February at 23:00 Beijing time tonight.
Next Friday, Federal Reserve Chairman Colin Powell will speak again on the US economy, giving him another chance to reassure the market. Other analysts believe that a disorderly sell-off in bonds or stocks could at least trigger verbal intervention by the Fed to prevent a crash.