Treasury Yields Fall, Prices Rise as Investors Huddle in Bonds for Safety Amid Stock Sell-Off

Source: NYSE

U.S. Treasury yields fell Wednesday, as investors sought shelter from a blistering sell-off in the equities market.

The yield on the benchmark 10-year Treasury note fell 9 basis points to 2.88%, despite topping 3% earlier in the day. The yield on the 30-year Treasury bond traded down 10 basis points to 3.061%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

The Dow Jones Industrial Average and S&P 500 were on track for their biggest daily declines since 2020, after a quarterly report from retailer Target stoked concern of rising inflation biting into corporate profits. The tech-heavy Nasdaq Composite also faltered, dropping 4.7%.

Those declines pushed the Nasdaq deeper into bear market territory. They also put the S&P 500 down more than 17.7% for 2022; the Dow was down 13.3% year to date.

Risk assets like stocks have been under pressure all year as worries over surging inflation and tighter Federal Reserve policy rattled investors. On Tuesday, Fed Chairman Jerome Powell said on Tuesday that the U.S. central bank would continue to raise interest rates until inflation starts to fall back to a healthy level.

Kit Juckes, macro strategist at Societe Generale, said on Wednesday that it's "not just the rate hikes that hurt" the economy.

"The jump in inflation, increased uncertainty, the way that the huge pile of savings is distributed through society, all challenge the US economy's resilience," he explained.

Treasury yields, meanwhile, have been on the rise in 2022. The benchmark 10-year started the year at around 1.5%. However, investors turned to bonds Wednesday in their search for cover from the stock market sell-off.

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