Bessent's Bond Buying Fails to Bolster Tech Stocks Amid Geopolitical Risks
US Treasury Secretary Bessent's actions had a significant impact on financial markets on Monday. He deployed nearly $1 trillion in TGA account funds to repurchase long-term bonds, which led to a decline in long-end yields. However, the sanctions imposed on Iran elevated geopolitical risks and dampened risk appetite, causing capital to flow into safe-haven assets such as gold and Bitcoin.
The yield on the 10-year US Treasury note fell by approximately 3 basis points to 4.70%, while the 30-year declined about 2 basis points to 5.25%. Despite this, tech stocks did not benefit from lower interest rates, with the Nasdaq falling 0.76% and the Philadelphia Semiconductor Index declining nearly 4%.
Nvidia's announcement of price increases exceeding 15% for AI servers next year also contributed to the decline in tech stocks. The company plans to invest in AI search firm Perplexity, which may have some positive implications for its earnings report scheduled for after-hours release on Wednesday.