$S&P 500 Index (.SPX.US)$ Recording the largest single-day drop since March(See the image below), driven by a global bond market sell-off $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ , breaking above 4.5%(See the image below), with Japan's 30-year government bond yield rising to 4%, and the UK’s long-term government bond yield hitting its highest level in 28 years.
Implications from historical data as bond yields rise
Persistently high oil prices, large-scale US debt issuance, and inflation data continuing to exceed expectations are all key factors triggering this round of bond sell-offs. $Crude Oil Futures (AUG6) (CLmain.US)$ , hovering near $105(See the image below). As tensions persist in Iran's geopolitical situation, energy prices are unlikely to fall in the short term, directly pushing up inflation expectations.The US PPI for April rose 6% year-over-year, hitting a more than three-year high, with CPI data remaining elevated as well. The market has almost completely withdrawn its bets on a June rate cut (see chart below). Not only is a rate cut unlikely in the next six months, but there is also the possibility of a rate hike.
A rise in bond yields has always been a 'curse' for the stock market.The pressure from rising bond yields on the stock market has historically occurred regardless of whether stock valuations are high or low. This was true in 2018 when stock valuations were relatively low, and also in 1994 and 2022 when valuations were higher. Rising U.S. Treasury yields have consistently pressured the stock market. Looking back at 1994, the Federal Reserve raised the benchmark interest rate from 3% to 6% within just one year, while the yield on 30-year Treasuries...