Daily Summary: 10-Year Yields at 15-Year Highs!

Monday's session in European markets witnessed significant sell-offs in major stock indices. The German DAX dropped by 0.91%, the British FTSE 100 lost 1.28%, and Poland's WIG20 declined by over 2.21% during the day.

Sentiments on Wall Street were more divided, but selling pressure prevailed. The Nasdaq-100 was the only benchmark posting minimal gains (+0.18%). The S&P500 index lost nearly 0.47%, while the Russell 2000 fell by over 1.83%.

The reason behind the substantial sell-offs in the markets is the ongoing rise in yields of US Treasury bonds, particularly the 10-year yield, which reached 4.674% (15-year highs).

The US dollar was the strongest currency among developed countries, with the EURUSD pair losing 0.65%, trading below the 1.05 level, adding to the selling pressure on stocks and indices.

Investor attention during the afternoon trading session in the US turned towards speeches by Powell, Barra, Powell, and Harker from the Federal Reserve (Fed). Overall, bankers' comments seemed slightly dovish due to the dominant focus on maintaining a healthy and robust job market. Most bankers confirmed that the Fed is nearing the end of its interest rate hike cycle (implying no or just one 25-basis-point rate hike, although the swaps market does not give such a chance and already prices in the end of the cycle).

In the stock market sector, the automotive industry also attracted significant attention today. According to Reuters, General Motors and Stellantis are facing billion-dollar fees as part of the Biden administration's proposal to raise fuel consumption standards by 2032.

In the energy commodity market, we observed a drop in oil prices (WTI), which were down by nearly 2.0%, returning below $90 per barrel, while natural gas (Natgas) lost 3.1%.

Rising bond yields also accelerated declines in silver and gold prices, which lost 4.20% and 0.80%, respectively. Gold is trading at its lowest level since the beginning of March 2023.

In the cryptocurrency market, the first part of the day saw significant increases, especially in Bitcoin and Ethereum, which gained 4.0% and 2.0%, respectively, at their peak. However, in the second part of the day, the gains were curtailed as risk aversion increased.