US Financial Markets Tense Over Kabul Terror Instead of Tapering... Stock Prices Fall, Bond Prices Rise

Tapering Tensions Ahead of Jackson Hole Meeting Amid Spread of Bomb Terror Impact
Strengthening of Treasury Bonds and Dollar...Decline in Risk Assets

Victims of the Kabul airport bombing are being transported to the hospital.
[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. capital market has not escaped the impact of the bomb attack at Kabul Airport in Afghanistan. On the eve of the Federal Reserve's (Fed) Jackson Hole meeting, when interest in tapering was rising, greater attention was drawn to risk factors caused by geopolitical issues.

On the 26th (local time), the yield on the 10-year U.S. Treasury note was steady at around 1.346%, similar to the previous day. The Treasury yield rose to 1.375% in the morning ahead of the Jackson Hole meeting due to hawkish remarks from Fed officials, but the sentiment reversed in the afternoon.

As geopolitical concerns spread following the bomb attack at Kabul Airport, which reportedly killed 12 U.S. soldiers and 60 locals, the yield on safe-haven Treasury bonds fell. When Treasury yields fall, bond prices rise.

With bond prices rising, the U.S. dollar also showed strength. The dollar index, which had declined amid growing expectations of tapering delays since the end of last week, rose 0.25% to 93.065 on the day.

Major indices on the New York Stock Exchange also fell across the board. The Dow Jones Industrial Average dropped 0.54%, the S&P 500 fell 0.58%, and the Nasdaq declined 0.6% by the close.

The major New York stock indices showed slight weakness during the day but turned downward after news of the Kabul attack was reported.

On the same day, hawkish Fed officials argued that tapering should begin as soon as possible.

Esther George, President of the Kansas City Fed, said in an interview with CNBC that it would be appropriate for the Fed to start tapering, adding, "I will be ready to talk about tapering soon."

James Bullard, President of the St. Louis Fed, also insisted that the Fed must act to prevent the U.S. economy from overheating and that tapering should be completed by March next year.

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