US Stocks Plummet as Treasury Yields Reach New Highs Ahead of Trump-Xi Summit
US stocks are experiencing losses as investors remain cautious ahead of the summit between President Trump and Xi Jinping. The Dow Jones Industrial Average is trading within a descending channel, with sellers needing to break below 51,200 to extend the bearish move.
The Treasury yield on the 30-year bond has reached its highest level since 2004, while the US 10-year Treasury yield is hovering around its highest level in 19 years at 5.1%. This increase in yields is hurting demand for riskier assets such as equities by increasing the opportunity cost of holding stocks.
Markets are now pricing in a 75% probability of a 25-basis-point rate hike in December, up from 50% just a day ago. The Federal Reserve's hawkish comments and strong economic data have contributed to this increase in expectations.