Treasury Yields Retreat as Stocks Recover from Early Losses

Treasury yields retreated from their highest level in over two decades on Thursday, as stocks recouped early losses and the euro hit a 17-month low. The benchmark U.S. Treasury yield fell by nearly six basis points to close at 5.24%, after earlier reaching 5.342%, its highest mark since April 2002. This move came as investors digested fresh U.S. manufacturing data, which showed factory activity was little changed from the prior month but prices for inputs surged amid strong demand.

The Institute for Supply Management's September survey highlighted persistent inflation pressures, fueling expectations that short-term interest rates may need to settle at higher levels than previously anticipated. Oliver Pursche, senior vice president and advisor for Wealthspire Advisors, said the selloff in bond prices has pushed Treasury yields to levels that now appear attractive.

The 2-year Treasury yield fell by 12 basis points to 4.79%, while the 30-year Treasury yield dropped four basis points to 5.60%. Global stocks were mixed, with the pan-European STOXX 600 index dropping 1.3% and MSCI's gauge of stocks across the globe slipping 0.1%. However, major indexes on Wall Street recovered from early losses, with the S&P 500 bouncing from a two-week low to close up 14.91 points.