Dow Jones Index Drops 100 Points as US Government Bond Yields Surge
The Dow Jones index experienced a significant decline, plummeting by over 100 points, as a result of the surge in US government bond yields. At 8:39 pm Thai time, the Dow Jones Industrial Average stood at 33,309.95 points, marking a decrease of 123.40 points or 0.37%.
The reason behind this decline can be attributed to the sudden increase in the yield on the 10-year US government bond, which currently serves as a global reference for pricing debt instruments, including mortgage interest rates in the United States. As a consequence, consumer spending power is expected to diminish while the cost of mortgage loan repayments rises. Additionally, companies will encounter higher debt repayment expenses, leading them to curtail investments and reduce dividend payments to investors.
Furthermore, the market is facing additional pressure due to the strengthening of the US dollar. This factor is particularly detrimental to companies listed on the stock exchange with foreign income, as it directly impacts their profitability.
The Dollar Index, which measures the dollar’s performance against six major currencies, has reached its highest level in ten months. This rise corresponds with the increase in US government bond yields.
Attention Shifts to Non-Agricultural Employment Figures
Market participants will closely monitor the upcoming release of non-agricultural employment data on Friday. Analysts anticipate an uptick in employment figures, predicting an increase of 163,000 jobs in September compared to 187,000 jobs in August. Moreover, there are expectations that the unemployment rate will adjust from 3.8% in August to 3.7%.
The Dow Jones index fell more than 100 points, weighed down by a surge in US government bond yields.
As of 8:39 pm Thai time, the Dow Jones Industrial Average was at 33,309.95 points, down 123.40 points or 0.37%.
US 10-year Treasury yields jumped to a 16-year high today amid expectations the Federal Reserve (Fed) will keep interest rates high for extended periods of time to curb inflation.
The increase in the yield on the 10-year US government bond, which is the US government bond used as a reference in determining the price of debt instruments around the world. This includes US mortgage interest rates. It will cause consumers to have less money to spend. Meanwhile, the cost of paying off mortgage loans is increasing. And companies will face higher debt repayment costs. causing these companies to reduce investment and reduce dividend payments to investors
Moreover, the market was also under pressure strengthening the dollar. This will affect the profits of listed companies with foreign income.
The Dollar Index measures the movement of the dollar against six major basket currencies. It reached its highest level in 10 months today. This is in line with the rise in US government bond yields.
The market will keep an eye on the non-agricultural employment numbers on Friday. Although analysts predicted that employment figures increased by 163,000 jobs in September. of 187,000 jobs in August. And it is expected that the unemployment rate will adjust to 3.7% from 3.8% in August.
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