Global Stocks and Bonds Sell-off Deepens

Barry Adams
03 Nov, 2022
New York City

Stocks on Wall Street turned lower and bond yields surged after the Federal Reserve lifted its key lending rate and also clarified the direction of future rate path. 

The yield on 2-year Treasury bonds surged to 4.7%, a high not seen since 2007 after the Fed Chairman Powell reiterated the central bank's hawkish stance against inflation.

The yield on 2-year Treasury notes rose to 4.70%, 10-year Treasury notes jumped to 4.14%, and 30-year bonds inched higher to 4.15%. 

Tech stocks led the decliners on the worries that the rate tightening cycle will reduce the value of future profits. 

Amazon, Alphabet, Apple, Meta, Microsoft and Tesla dropped between 2% and 4%. 

The S&P 500 index decreased 0.8% to 3,729.44 and the Nasdaq Composite index declined 1.2% to 10,391.99. 

Crude oil declined $1.33 to $88.68 a barrel and natural gas fell 15 cents to $6.10 a thermal unit. 

The U.S. trade gap enlarged to $73.3 billion in September from a downwardly revised $65.7 billion deficit in August. The trade deficit rose to a 3-month high. 

The goods trade deficit increased by $6.6 billion to $92.7 billion and the service surplus declined $1.0 billion to $19.5 billion. 

Total imports increased 1.5% to $331.3 billion and exports fell 1.1% to $258 billion. 

Market indexes in Europe also turned lower and the Bank of England lifted its key lending rate. 

The central bank revised higher its lending rate by 75 basis points, the largest rate increase in 33 years, to 3.0%. 

Bond yield rose following the global bond market sell-off after the U.S. rate hike. 

The yield rose on 10-year German bunds to 2.24%, French bonds to 2.73%, the UK bonds to 3.48% and Italian bonds to 4.42%.