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The 10-year Treasury yield, a key benchmark, reached nearly 4.57% early Tuesday, marking its highest level since 2007. This rise comes amid market expectations of a more aggressive Federal Reserve stance on interest rates. Several Fed officials have recently suggested the need for the central bank to raise rates again and maintain them at higher levels for a considerable period.
JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon warned that the market might not be ready for potential interest rate hikes to 7% if inflation isn’t adequately controlled. The increase in Treasury yields has posed challenges for riskier assets, particularly long-duration stocks struggling to absorb these rate increases.
The U.S. dollar index rose above 106 – its highest point in approximately ten months – due to higher Treasury yields compared to international counterparts, which could potentially hinder U.S. equities by reducing the competitiveness of multinational companies.
Global markets are also unsettled by the crisis in China’s property sector. Shares in China Evergrande (HK:3333) plummeted after the heavily indebted developer failed to make a debt payment, leading to the arrest of former executives. Consequently, Hong Kong’s Hang Seng index dropped by 1.4%, marking its lowest point since November.
Tuesday’s U.S. economic data release includes the S&P Case-Shiller home price index for July at 9 a.m. Eastern, August’s new home sales and September’s consumer confidence figures at 10 a.m. Federal Reserve Governor Michelle Bowman is also scheduled to deliver a speech at 1:30 p.m.
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