Dow Plunges to Fresh Low as Long Bond Yields Surge

The Dow Jones Industrial Average (DJIA) is experiencing its third consecutive losing session as it falls to a fresh low of 51,100. This marks a significant drop from its previous low in June. The DJIA's decline is attributed to the rising 30-year Treasury yield, which has reached its highest level since 2004.

New York Fed President Williams announced that the era of explicit forward guidance is over, and market bets on another rate hike before year-end appear reasonable. Philadelphia Fed President Paulson echoed this sentiment, stating that a little more tightening may be needed after the recent hike to 3.75-4.00%.

The mortgage market has already experienced four hikes' worth of tightening, with investors demanding higher rates for lending 30 years due to ongoing inflationary pressures and the costly Iran war. As a result, the 30-year mortgage rate is near 7%, affecting Dow members such as Home Depot (HD) and Sherwin-Williams (SHW), which rely heavily on the housing market.