[Good Morning Stock Market] US 10-Year Treasury Yield Rises to 1.78% but...

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Junho Hwang] The yield on the US 10-year Treasury note hit a 14-month high during the session before retreating. As US President Joe Biden is set to announce an infrastructure investment plan soon, expectations of rising inflation caused fluctuations in yields. Demand for safe-haven assets increased, leading to a decline in the US stock market. Since the trend of long-term US yields acts as a fear gauge for the Korean stock market, attention is focused on whether it will affect the Korean market when it opens that day.

On the 31st, the 10-year Treasury yield rose by as much as 6 basis points during the session to 1.77%, before falling to 1.72% near the close. The 30-year yield also rose to 2.46% intraday but closed at 2.37%.

The Biden administration's large-scale stimulus package is analyzed to have pushed market yields higher. On the following day, the 31st (local time), an infrastructure investment plan will be announced in Pittsburgh. The market expects the package to be in the range of $3 to $4 trillion. With the large stimulus, expectations for inflation increased, causing Treasury yields to rise. The White House's announcement to grant COVID-19 vaccination eligibility to 90% of adults by the 19th of next month also raised hopes for economic recovery and inflation.

Accordingly, on the 30th (local time), the Dow Jones Industrial Average closed down 104.41 points (0.31%) at 33,066.96, the S&P 500 fell 12.54 points (0.32%) to 3,958.55, and the Nasdaq dropped 14.25 points (0.11%) to 13,045.39.

Ahn Jae-kyun, a researcher at Korea Investment & Securities, said, "For the US to strengthen future economic growth, fiscal policies such as infrastructure investment are necessary, and accordingly, funding must be secured." He added, "The likelihood of tax increases is not considered a major burden on the bond market, and it is highly likely that market sentiment will stabilize as tax discussions proceed."

The Asset Strategy Team at SK Securities Research Center commented, "Although the US 10-year yield rose to 1.72% intraday the previous day, the market's sensitivity to yields appears to be gradually diminishing." They also evaluated that "the impact of block trades caused by margin calls from the US hedge fund Archegos Capital Management was minimal." On the same day, the KOSPI closed higher, supported by accelerated US vaccination progress and inflows from institutions and foreigners, mainly in large-cap stocks.

This content was produced with the assistance of AI translation services.