US Treasury yields have plunged this week, defusing a tense January for bond markets and helping stocks find a foothold in the earnings season. The 10-year yield has fallen below 4.5%, its lowest of the year, as January ISM service sector readings showed a surprise drop in prices paid by businesses.
The drop in yields came largely independently of futures thinking on Federal Reserve interest rates, with Fed officials still inclined to ease slowly and gradually. However, recent comments from new Treasury Secretary Scott Bessent suggest that 10-year yields will be brought down rather than cut.
Falling crude oil prices have also calmed the market, while the European Central Bank’s rate cuts last week and Bank of Canada’s decision this week have set a positive tone for central bank easing elsewhere. The Bank of England is expected to cut its key policy rates on Thursday, with at least two more cuts pencilled in by markets.
European stocks reached another record high, driven by gains in the tech sector, while Mainland Chinese and Hong Kong indexes advanced smartly despite US tariff rises and retaliatory measures from Beijing. US corporate earnings are set to continue providing direction for markets later this week, with Amazon due to report after the close on Thursday.
Key developments include Bank of England policy decisions, US January layoffs data, and Fed Governor Christopher Waller’s speech, which will provide insight into the Federal Reserve’s stance on interest rates.
Source: https://finance.yahoo.com/news/morning-bid-bonds-defused-stocks-110645996.html