US bond yields hit 5 per cent, dragging down Wall Street and the dollar
The US 10-year bond yield breached 5 per cent for the first time since 2023 as markets await a Fed rate increase.
Wall Street fell as the US 10-year Treasury yield climbed to 5.01 per cent from 4.97 per cent on Monday, the first time it has breached 5 per cent since 2023. The S&P 500 dropped 0.4 per cent, the Dow Jones fell 0.8 per cent, and the Nasdaq lost 0.8 per cent.
Higher yields force governments, businesses and households to pay more in interest when they borrow, slowing the economy overall. Investors also move money out of stocks into bonds when yields rise, since bonds become more attractive.
Oil prices jumped 3.5 per cent to $US109.35 a barrel, fuelling inflation concerns and adding pressure to markets. The Federal Reserve is expected to raise interest rates on Wednesday for the first time in three years.
Australia's sharemarket is set to rise 0.4 per cent at open, but the Australian dollar fell to 71.31 US cents.
- 5.01 per cent
- 10-year yield
- 406 points or 0.8 per cent
- Dow Jones drop
- 71.31 US cents
- Australian dollar
- around the turn of the millennium
- Last time above 5 per cent
Why it mattersRising interest rates and yields make borrowing more expensive and slow economic growth, affecting job prospects, mortgages and investment returns worldwide.
AustraliaA stronger US dollar and higher global yields can push down Australian investment returns and make Australian exports more expensive for overseas buyers.
✓ Claims checked against the source. checked 9 d ago
