Latest news with #BondYields
Yahoo
7 days ago
- Business
- Yahoo
What could drive another bond market meltdown this year?
Bond yields (^TYX, ^TNX, ^FVX) have stayed surprisingly calm despite fiscal concerns and questions around Federal Reserve independence. Charles Schwab chief investment strategist Liz Ann Sonders and Yahoo Finance Senior Reporters Allie Canal and Ines Ferré join Opening Bid host Brian Sozzi to discuss what could drive the next move. To watch more expert insights and analysis on the latest market action, check out more Opening Bid here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Wall Street Journal
23-07-2025
- Automotive
- Wall Street Journal
How Japanese Assets Are Reacting to the U.S. Trade Deal
The Nikkei Stock Average jumped 3.5%, reaching its highest closing level in roughly a year. Automakers such as Toyota and Honda led the way, surging by double-digit percentages, as the U.S.-Japan deal was less onerous for the car industry than some feared. Japanese bond yields rose, with the 10-year yield moving up toward 1.6%. The yen held broadly steady against the U.S. dollar. Here is the latest in charts:
Reuters
22-07-2025
- Business
- Reuters
Trading Day: Tech cools, Trump's Fed ire burns
ORLANDO, Florida, July 22 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist The rally in U.S. tech stocks lost steam on Tuesday while bond yields and the dollar fell, as investors trimmed positions ahead of the first 'Big Tech' earnings reports and digested U.S. President Donald Trump's latest tirade against Fed Chair Jerome Powell. More on that below. In my column today I look at the differences - and potentially worrying similarities - between today's AI frenzy and the dotcom boom and bust of 25 years ago. Is today's bubble bigger than it was back then? If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Tech cools, Trump's Fed ire burns If investors cooled their stock-buying fervor on Tuesday, Trump showed no sign of relaxing the pressure he's heaping on Powell, branding the Fed chair a "numbskull" for not cutting interest rates. Financial markets may be getting inured to the attacks by now, but one wonders if Powell will be prepared to face another 10 months of them until his term as Fed Chair expires. With Powell in blackout period ahead of next week's Fed decision, investors are unlikely to hear from him until next Wednesday when he holds his scheduled post-meeting press conference. Powell has insisted he won't resign and that Trump does not have the legal authority to fire him, while the president doesn't appear to be in any mood to tone down his rhetoric against Powell or the Fed as an institution. The standoff is getting more tense. So much so, former PIMCO CEO and co-CIO Mohamed El-Erian posted on X that Powell should resign "to safeguard the Fed's operational autonomy," a far from ideal scenario but preferable to the growing and broadening threats to Fed independence which will "undoubtedly increase should he remain in office." Meanwhile, on trade, Treasury Secretary Scott Bessent said he will meet his Chinese counterpart next week in Stockholm to discuss extending an August 12 deadline for a deal to avert sharply higher tariffs. Trump said he may take up President Xi Jinping on his offer to visit "in the not-too-distant future". Washington announced a trade deal with the Philippines which will see imports from the South East Asian country slapped with 19% tariffs, while the U.S. will pay zero tariffs. Similar tariffs on imports from Indonesia were also announced. U.S.-Philippines and U.S.-Indonesia goods trade volumes last year were around $23.5 billion and $38.3 billion, respectively. The latest U.S. corporate earnings were a mixed bag, with Coca-Cola reporting strong profits and demand, while General Motors' net income slumped by a third as tariff costs took a $1.1 billion bite from its bottom line. Still, nearly 80% of the S&P 500 firms that have reported so far have beaten analyst expectations, according to LSEG data. Analysts' year-on-year aggregate earnings growth forecasts for the index now stand at 7.0%, up from 5.8% as of July 1. Attention on Wednesday rests squarely on Alphabet and Tesla, the first of the megacap tech firms to report. Is today's AI boom bigger than the dotcom bubble? Wall Street's concentration in the red-hot tech sector is, by some measures, greater than it has ever been, eclipsing levels hit during the 1990s dotcom bubble. But does this mean history is bound to repeat itself? The growing concentration in U.S. equities instantly brings to mind the internet and communications frenzy of the late 1990s. The tech-heavy Nasdaq peaked in March 2000 before cratering 65% over the following 12 months. And it didn't revisit its previous high for 14 years. It seems unlikely that we'll see a repeat of this today, right? Maybe. The market's reaction function appears to be different from what it was during the dotcom boom and bust. Just look at the current rebound from its post-'Liberation Day' tariff slump in early April – one of the fastest on record – or its rally during the pandemic. But despite all of these differences, there are also some worrying parallels. Investors would do well to keep both in mind. The most obvious similarity between these two periods is the concentration of tech and related industries in U.S. equity markets. The broad tech sector now accounts for 34% of the S&P 500's market cap, according to some data, exceeding the previous record of 33% set in March 2000. Of the top 10 companies by market capitalization today, eight are tech or communications behemoths. They include the so-called 'Magnificent 7' – Apple (AAPL.O), opens new tab, Amazon (AMZN.O), opens new tab, Alphabet (GOOGL.O), opens new tab, Meta (META.O), opens new tab, Microsoft (MSFT.O), opens new tab, Nvidia (NVDA.O), opens new tab and Tesla (TSLA.O), opens new tab – as well as Berkshire Hathaway (BRKa.N), opens new tab and JPMorgan (JPM.N), opens new tab. By contrast, only five of the 10 biggest companies in 1999 were tech firms. The other five were General Electric (GE.N), opens new tab, Citi, Exxon (XOM.N), opens new tab, Walmart (WMT.N), opens new tab, and Home Depot (HD.N), opens new tab. On top of that, the top 10 companies' footprint in the S&P 500 (.SPX), opens new tab today is much larger than it was back then. The combined market cap of the top 10 today is almost $22 trillion, or 40% of the index's total, significantly higher than the comparable 25% in 1999. This all reflects the fact that technology plays a much bigger role in the U.S. economy today than it did around the turn of the millennium. By some measures, the current tech boom, driven in part by enthusiasm for artificial intelligence, is more extreme than the IT bubble of the late 1990s. As Torsten Slok, chief economist at Apollo Global Management, points out, the 12-month forward earnings valuation of today's top 10 stocks in the S&P 500 is higher than it was 25 years ago. However, it's worth remembering that the dotcom bubble was characterized by a frenzy of public offerings and a raft of companies with shares valued at triple-digit multiples of future earnings. That's not the case today. While the S&P tech sector is trading at 29.5 times forward earnings today, which is high by historical standards, this is nowhere near the peak of almost 50 times recorded in 2000. Similarly, the S&P 500 and Nasdaq are currently trading around 22 and 28.5 times forward earnings, compared with the dotcom peaks of 24.5 and over 70 times, respectively. With all that being said, a meaningful, prolonged market correction cannot be ruled out, especially if AI-driven growth isn't delivered as quickly as investors expect. AI, the new driver of technological development, will require vast capital outlays, especially on data centers, which may mean that earnings and share price growth in tech could slow in the short run. According to Morgan Stanley, the transformative potential of generative AI will require roughly $2.9 trillion of global data center spending through 2028, comprising $1.6 trillion on hardware like chips and servers and $1.3 trillion on infrastructure. That means investment needs of over $900 billion in 2028, they reckon. For context, combined capital expenditure by all S&P 500 companies last year was around $950 billion. Wall Street analysts are well aware of these figures, which suggests that at least some percentage of these huge sums should be factored into current share prices and expected earnings, but what if the benefits of AI take longer to deliver? Or what if an upstart (remember China's DeepSeek) dramatically shifts growth expectations for a major component of the index, like $4-trillion chipmaker Nvidia? Of course, technology is so fundamental to today's society and economy that it's difficult to imagine its market footprint shrinking too much, for too long, as this raises the inevitable question of where investor capital would go. It's therefore reasonable to question whether a tech crash today would take well over a decade to recover from. But, on the other hand, it's that type of thinking that has gotten investors into trouble before. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Yahoo
20-07-2025
- Business
- Yahoo
Fed's influence on mortgage rates: What homebuyers should know
Mortgage rates remain high, leaving homebuyers weighing whether to act now or wait for potential relief. Melissa Cohn, regional vice president at William Raveis Mortgage, explains how Federal Reserve signals, inflation, and bond yields (^TYX, ^TNX, ^FVX) are shaping the path forward for interest rates this year. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. While mortgage rates aren't directly set by the Federal Reserve, they are influenced by its policy stance, and you can see that connection in this chart here, which tracks the average 30-year mortgage rate alongside Fed actions. So what should home buyers keep in mind about current rates, and what's the outlook for the rest of the year? Joining us now with more insight is Melissa Cohn, regional vice president at William Raveis. So Melissa, we often hear that the Fed doesn't directly set mortgage rates, but it does influence them. So can you walk us through that relationship and how Fed policy decisions trickle down to home buyers? So mortgage rates are really tied to the 10-year treasury yield, uh, which is impacted by the same data that the Fed looks at. So when there's weak economic data, bond yields go down, mortgage rates go down. At the same time, if the Fed sees that the economy is weakening, then they would be more likely to cut rates based upon that same data. So mortgage rates, bond yields, fed funds rates, all sort of travel in the same direction, generally based on economic data and the rate of inflation. Right, economic data, expectations, and given where we're at in the current environment, what do you think lenders are watching most closely? Is it inflation? Is it Fed signals? Is it the 10-year yields, or all of the above? I mean, it's obviously all of the above because the bond market is going to react to what the Fed does, what the Fed says. You know, if the Fed at the end of this month says that they intend to remain hawkish on inflation and that they're worried, they continue to worry about the inflationary impact of tariffs on the economy, you know, the bond market will probably react negatively, and that will cause mortgage rates to go up because the fear is that rates will stay higher for longer. If the Fed has the opposite statement, and they take a more dovish look and say that if the rate of inflation remains where it is based upon tariffs and the economy continues to sort of muddle along the way it is right now, the Fed could say that they'd be open to a rate cut, and then the bond market would rally, and mortgage rates would come down. So with the Fed widely expected to hold rate steady at its July meeting, maybe a cut in September, what's your call at least directionally on where mortgage rates could be heading in the second half of the year? I mean, we continue to see that, you know, the employment sector is stronger than the market was expecting but not as strong as it has been. So, weakening employment sector, we've seen other weakening areas in the economy and that the rate of inflation, while it's gone up a little bit on the retail level, uh, this past month, is still pretty much in line where, you know, the rate of inflation has been. So my hope is that the Fed will cut in September and will indicate that further cuts are potentially will happen at the end of the year and that mortgage rates will settle down. I think it's all going to be based on what the Fed says at the end of the month and what they do in September, but my expectation is that we will see lower rates by the end of the year. And if the Fed does end up staying on hold longer for than we expect, which has become a more likely scenario in recent weeks, could we see mortgage rates stick near that 7% level, or are there other factors that could maybe bring some relief for buyers even if we have this higher for longer interest rate environment? Well, you know, the bond market is very reactionary, and bond yields move up and down every day based upon current economic data, based upon geopolitical events, and a lot of other things. So the bond yields can drop, and mortgage rates can drop even if the Fed doesn't cut rates. And for people on the fence right now, do you recommend buying and refinancing later, or waiting it out? What's the smartest move in this market that can be a little bit confusing? You know, if you're looking to buy, it's really about finding the right house, not about finding the right mortgage rate. So I would tell you to buy when you find that right home. And then if you can buy and you can afford the home at today's interest rates, when, hopefully, rates come down, you can always refinance. And then, you know, it's a win-win situation. Related Videos There's a little 'irrational exuberance' in markets: Strategist Trump expected to push for 401(k) private assets: Pros & cons Trump signs GENIUS Act into law, a 'key moment' for crypto How to save and pay for a last-minute summer vacation Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-07-2025
- Business
- Yahoo
Fed's influence on mortgage rates: What homebuyers should know
Mortgage rates remain high, leaving homebuyers weighing whether to act now or wait for potential relief. Melissa Cohn, regional vice president at William Raveis Mortgage, explains how Federal Reserve signals, inflation, and bond yields (^TYX, ^TNX, ^FVX) are shaping the path forward for interest rates this year. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here.
