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Business Times
19-05-2025
- Business
- Business Times
US: Stocks end higher, shrugging off Moody's downgrade
[NEW YORK] Wall Street stocks edged higher on Monday after shrugging off a spike in US Treasury bond yields following Moody's downgrade of the US credit rating. But yields subsequently eased as markets concluded Moody's analysis contained no surprises. After the knee-jerk reaction, 'the market settles down and focuses on the economic fundamentals,' said Subadra Rajappa, Head of US rates strategy at Societe Generale. The downgrade reflects serious concerns about the US' fiscal picture, but they were well known prior to the Moody's downgrade, Rajappa said. The Dow Jones Industrial Average closed 0.3 per cent higher at 42,792.07. The broad-based S&P 500 edged up 0.1 per cent to 5,963.60, while the tech-rich Nasdaq Composite Index added less than 0.1 per cent at 19,215.46. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Monday's session was the first since Moody's late Friday announced the downgrade, citing rising levels of US government debt and interest payment ratios 'to levels that are significantly higher than similarly rated sovereigns.' On Monday, the yields on 10- and 30-year US bond surged above the levels in early April when President Donald Trump's aggressive tariff announcements sent markets spiraling. But in comparison with that turbulent period, a closely-watched volatility index remained relatively stable. Stocks have rallied since Trump suspended many of his most onerous tariff measures. Still, JPMorgan chief executive officer Jamie Dimon during an investor day characterised the remaining levies as 'pretty extreme tariffs,' suggesting stocks are overvalued in light of lingering risks. 'I think that's an extraordinary amount of complacency,' Dimon said of overall market sentiment. Among individual companies, Regeneron Pharmaceuticals rose 0.4 per cent after announcing it will buy genetic testing company 23andMe out of bankruptcy for US$256 million, a deal that provides the US biotech company with data on millions of clients. Novavax soared 15 per cent after US health regulators gave final approval to Novavax's Covid vaccine after an unusual delay. The drug has been approved for use in only two categories of patients: people aged 65 years and up, and those aged 12 to 64 who have at least one underlying health condition that puts them at high risk from Covid. AFP
Straits Times
19-05-2025
- Business
- Straits Times
US stocks end higher, shrugging off Moody's downgrade
A television broadcasts Moody's US credit downgrade news on the floor of the New York Stock Exchange on May 19. PHOTO: BLOOMBERG NEW YORK - Wall Street stocks edged higher on May 19 after shrugging off a spike in US Treasury bond yields following Moody's downgrade of the US credit rating. But yields subsequently eased as markets concluded Moody's analysis contained no surprises. After the knee-jerk reaction, 'the market settles down and focuses on the economic fundamentals,' said Ms Subadra Rajappa, head of US rates strategy at Societe Generale. The downgrade reflects serious concerns about the US' fiscal picture, but they were well known prior to the Moody's downgrade, Ms Rajappa said. The Dow Jones Industrial Average finished up 0.3 per cent at 42,792.07. The broad-based S&P 500 edged up 0.1 per cent to 5,963.60, while the tech-rich Nasdaq Composite Index added less than 0.1 per cent at 19,215.46. May 19's session was the first since Moody's on May 16 announced the downgrade, citing rising levels of US government debt and interest payment ratios 'to levels that are significantly higher than similarly rated sovereigns.' On May 19, the yields on 10- and 30-year US bond surged above the levels in early April when President Donald Trump's aggressive tariff announcements sent markets spiraling. But in comparison with that turbulent period, a closely-watched volatility index remained relatively stable. Stocks have rallied since Mr Trump suspended many of his most onerous tariff measures. Still, JPMorgan Chief Executive Jamie Dimon during an investor day characterised the remaining levies as 'pretty extreme tariffs,' suggesting stocks are overvalued in light of lingering risks. 'I think that's an extraordinary amount of complacency,' Mr Dimon said of overall market sentiment. Among individual companies, Regeneron Pharmaceuticals rose 0.4 per cent after announcing it will buy genetic testing company 23andMe out of bankruptcy for US$256 million (S$333 million), a deal that provides the US biotech company with data on millions of clients. Novavax soared 15 per cent after US health regulators gave final approval to Novavax's Covid-19 vaccine after an unusual delay. The drug has been approved for use in only two categories of patients: people aged 65 years and up, and those aged 12 to 64 who have at least one underlying health condition that puts them at high risk from Covid-19. AFP Join ST's Telegram channel and get the latest breaking news delivered to you.
Yahoo
10-04-2025
- Business
- Yahoo
US 30-Year Bond Auction Abates Worst Fears of a Buyers' Strike
(Bloomberg) -- Investors in the $29 trillion Treasury market got a welcome dose of stability after an auction of 30-year bonds was met with strong demand. Longer-dated Treasuries pared their earlier losses after investors snapped up $22 billion of US government debt sold on Thursday, with 30-year yields lingering near 4.83%. Shorter-term notes, meanwhile, kept up a rally spurred by evidence that underlying US inflation ebbed last month. For investors, the solid auction result is a signal that there are still plenty of buyers of Treasuries — even after this week's intense volatility tied to President Donald Trump's evolving trade policy eroded appetite for US assets and prompted questions about whether the nation's debt remains the world's favored haven. 'We did have a pretty large concession heading into the auction, which probably made it an attractive entry point for investors,' said Subadra Rajappa, head of US rates strategy at Societe Generale. 'The auction metrics are relatively strong,' though she noted that investors still needed more compensation for risk than they did at the last 30-year bond auction. Follow The Big Take daily podcast wherever you listen. Amid signs that investors were unwinding leveraged bond bets, selling of long-term debt caused yields to soar, with the 30-year briefly topping 5% on Wednesday for the first time in more than a year. This week's trio of auctions had been cause for further anxiety on Wall Street. While a three-year sale on Tuesday was met with tepid appetite, the 10-year auction the next day saw good demand, allaying concerns that tariffs would curb foreign demand for US bonds. This was reinforced with Thursday's 30-year offering, which drew a yield of 4.813%, the highest since January, compared to the 4.839% when-issued yield at the 1 p.m. New York time bidding deadline. The good result failed to ignite a rally, however. 'The demand was really from fast money traders' who quickly abandoned the issue, said David Robin, an interest-rate strategist at TJM Institutional Services LLC. Buy-and-hold accounts have 'no sustainable interest. The long end is much too unsettled still,' and reliant on foreign demand that's at risk of drying up, he said. Still, data earlier on Thursday offered some reason for cheer in bonds as US inflation cooled broadly in March — before Trump's April 2 unveiling of sweeping levies. Two-year yields were up five basis points to 3.85% after earlier climbing as much as 13 basis points. Traders priced in expectations for three interest-rate cuts in the remainder of 2025 starting in June, with a chance of a fourth. 'The downside surprise in inflation should be fairly encouraging to the rates market,' Gennadiy Goldberg, head of US interest rates strategy at TD Securities. Still, 'the reaction may be brief as the market waits for more news on trade.' Kathy Jones, chief fixed income strategist at Charles Schwab, pointed out that the report doesn't yet reflect the full extent of the tariffs — or anxiety surrounding changes in Trump's policy. The April 2 announcement had sent the bond market rallying as investors fretted that the US economy will end up worse off from a trade war. But the 90-day pause on most higher 'reciprocal' levies on Wednesday spurred steep gains for stocks and a surge in short-term yields across much of the developed world as traders greeted the reprieve by scaling back bets on interest-rate cuts. The yield on the German two-year note soared nearly 20 basis points before paring on expectations that the European Central Bank will need to ease less. In the UK, bonds rallied after borrowing costs hit their highest since 1998 this week. 'Bonds are signaling that the pause is significant, yet not much has fundamentally changed,' ING rates strategists led by Padhraic Garvey wrote in a note published Thursday. 'Markets will not easily forget these episodes with wide market swings and thus the demand for safe assets should remain elevated.' In Asian trading, Australia's three-year bond yields surged Thursday by the most since September 2022. Japan was an outlier, with its longer-end bonds facing the most selling pressure: 10-year JGB yields rose 13 basis points to 1.40% at one point. Traders are now bracing for a period of prolonged negotiations that could weigh on markets for months. The recent moves in the Treasury market have fueled speculation among traders about who has been selling. Some investors are worried about a blowup of the basis trade, where hedge funds profit from the difference between futures and spot prices, others about an implosion of trades in interest-rate swaps. Another theory is that central banks are cutting their holdings of Treasury debt. And amid the on-again, off-again whiplash of Trump's tariffs, investors are facing the increasingly complicated task of trying to figure out how shifts in global trade will impact the twin levers of growth and inflation — both important drivers of rate expectations. 'This period of instability will continue for the next couple of weeks,' said Tsutomu Soma, a bond trader at Monex Inc. in Tokyo. 'No one knows what shape these tariffs are ultimately going to take and everyone's looking at US yields to trade — so brace for more chaos ahead.' --With assistance from Alice Atkins, Kristine Aquino, Ruth Carson, Alice Gledhill and Michael Mackenzie. (Updates yield levels.) More stories like this are available on ©2025 Bloomberg L.P. Sign in to access your portfolio
