Bonds Plunge, Stocks Undo Gains on Inflation Risk: Markets Wrap

(Bloomberg) — Inflation concerns are rattling investors worldwide once again, fueling a selloff in bonds and sending U.S. stocks down from record highs.

Ten-year Treasury yields climbed above 1.75% for the first time since January 2020, while the 30-year breached 2.5% for the first time since August 2019. The Nasdaq 100 Index, a benchmark for high-valuation stocks that are sensitive to rising yields, sank, with Apple Inc., Microsoft Corp. and Tesla Inc. leading the declines.

The S&P 500 erased gains from Wednesday, when the closely-watched benchmark hit an all-time high. The Dow Jones Industrial Average was little changed, with JPMorgan Chase & Co. leading the financials higher amid the rise in yields. The Federal Reserve’s apparent willingness to keep pumping support into the economy and let it run hotter has spurred bets on faster growth and inflation, sending market expectations of price pressures to multi-year highs.

”The fact that they’re standing so steadfast in what they’re doing right now, I think is really their attempt to get the market used to the new normal,” said Arthur Hogan, chief market strategist at National Securities Corp.

The dollar held gains after initial jobless claims unexpectedly rose last week to the highest since mid-February.

Read: Treasury Yields Top 1.75% After Powell Spurs Bets on Inflation

In Asia and Europe, stocks were boosted by lingering enthusiasm from the Fed’s outlook for stronger growth. Automakers and banks, which tend to outperform during cyclical upswings, were higher in Europe. Japan’s Topix jumped past the 2,000 mark for the first time since 1991, becoming the region’s top-performing major equity index this year.

Elsewhere, oil slipped after U.S. crude stockpiles topped half a billion barrels and the International Energy Agency said global supplies are plentiful. Bitcoin traded around $58,000.

Japan’s government bond yields rose on a Nikkei report that the Bank of Japan is considering widening the trading range around the 10-year target, which could spur concerns about policy tightening.

These are some key events this week:

Bank of Japan monetary policy decision and Governor Haruhiko Kuroda briefing Friday.

These are some of the moves in markets:

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