Global stocks drop as 10-year Treasury yields pierce 1.5% for the first time since the pandemic

Global stocks drop as 10-year Treasury yields pierce 1.5% for the first time since the pandemic

Global stocks dropped sharply on Friday, as the benchmark 10-year Treasury yield rose above 1.50% for the first time since the onset of the pandemic, driven by the prospect of accelerating growth and inflation that could trigger a faster rise in interest rates than many expect.

Futures on the S&P 500, and Nasdaq 100 rose by around 0.3%, while those on the Dow Jones edged up 0.1%, suggesting a modestly stronger open for US markets later on. Yields on the 10-year US treasury note stood at 1.468% on Friday, down around 4 basis points on the day, and down from a session high of 1.556%.

A stronger-than-expected US jobs report added to an expectation that the Fed could withdraw stimulus sooner than anticipated, and pushed Treasury yields towards their highest since last February in highly volatile trading. The sharp move higher in bond yields triggered a steep fall in US equities and tech stocks in particular suffering big losses. 

The spike in the 10-year-yield is spooking the stock market, according to Ryan Detrick, chief market strategist at LPL Financial. "Could there be more inflation coming than what most think? Although the Fed isn't worried about that, the market might be."

Higher Treasury yields call