US Treasuries drew buyers on Thursday as stocks fell and oil prices recovered some of Wednesday's losses, with investors scaling back hopes that the midterm elections would speed up an end to the war with Iran, The Economic Times reported.
Oil had dropped more than 8% and equities had rallied on Wednesday after voters handed control of Congress to the Democrats. "Just because voters aren't happy with it, it doesn't mean it's going to just automatically be reversed or come to a conclusion in the near term," said Mike Lorizio of Manulife Investment Management.
Where yields ended
- The 10-year yield fell 4.9 basis points to 4.843%, after touching its lowest since September 9.
- The 30-year yield fell 3 basis points to 5.25%.
- The two-year yield, most sensitive to Federal Reserve expectations, fell 5.6 basis points to 4.525%.
The Nasdaq fell sharply and was on course to confirm a correction, as chip and data-centre stocks slid.
Mixed signals on rates
New jobless claims fell to 189,000, a 57-year low, pointing to a strong labour market. Cleveland Fed President Beth Hammack said the Fed had more work to do on inflation, and Richmond Fed President Tom Barkin said a gradual pace of rate increases would "make sense".
Across the Atlantic, the Bank of England raised its main rate to 4% from 3.75%, its first increase in more than three years, Euronews reported. It warned that inflation could reach around 5% by the middle of 2027.
Mortgage rates ease
Lower yields are feeding through to US home loans. The average 30-year fixed mortgage rate fell to 7.18% from 7.24%, its third straight weekly fall, mortgage buyer Freddie Mac said. A year ago it was 6.22%. The 15-year rate dipped to 6.57% from 6.60%.
Why it matters
Lower Treasury yields have now eased US mortgage costs for three weeks running. But Fed officials Hammack and Barkin signalled that rate rises may still be needed, which would push the other way while oil keeps swinging with the war.
This report is for information only and is not investment advice.