Investors react as 10-year Treasury yield drops below 4%, expressing confidence in Fed rate cuts for 2024.
In a significant shift, the benchmark 10-year Treasury yield fell below 4% for the first time since August. This movement came as traders escalated their bets on the Federal Reserve implementing rate cuts for 2024, with the 10-year yielding around 3.95% in its last trade.
The news of the yield drop led to a surge in European markets, with the Stoxx 600 index rising by 1.7% to reach its highest level since January 2022. Furthermore, Germany’s DAX crossed the 17,000-point mark for the first time in its history.
Across the globe, the Swiss National Bank, continuing with its trend from the past 18 months, maintained its interest rates steady at 1.75%, as per analysts’ forecasts. This reaffirms the Swiss central bank’s interest rate on sight deposits at 1.75%.
Following the Federal Reserve’s dovish signal, European stocks opened strong. The mining sector took the lead with a 3.8% rise, as all sectors and major bourses traded positively.
Meanwhile, oil prices continued to climb higher after larger than expected withdrawals from U.S. stockpiles were reported. The price of West Texas Intermediate in January rose to trade at $70.08, while Brent crude increased to $74.93.
In the Asia-Pacific region, Australia’s unemployment rate rose to 3.9% in November. This marks the country’s highest rate since May 2022, surpassing economists’ expectations.
The Japanese yen strengthened against a weakened dollar after the U.S. Federal Reserve suggested future rate cuts. The yen rose to around 142 against the dollar, reaching its highest point in a week.
The Invesco Solar ETF experienced a pop of more than 5% on Wednesday after the Federal Reserve’s rate cut outlook. The fund jumped nearly 5.6% as solar stocks reaped the benefits.
Furthermore, three major American stock indexes, including the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite were on track for their seventh consecutive week of gains.
After hours, Adobe shares plunged more than 5% after issuing light full-year earnings and revenue guidance for 2024, while Vir Biotechnology saw a 2.4% fall after announcing various cost-cutting measures.
U.S. stock futures opened near the flatline, with Dow Jones Industrial Average futures increasing by just 2 points, S&P 500 futures ticking up by 0.02%, and Nasdaq Composite futures gaining 0.06%.