Economist's Insights

Today’s Trading Activity – S&P Reaches Record as Treasury Yields and the Dollar Rebound

Sep 11, 2017

U.S. stocks leveraged overnight strength in Asia and Europe to rally sharply Monday and push global equities to all-time record highs. The lack of weekend military action in North Korea (to mark the anniversary of its day of founding) spurred a relief rally for global equities as Asian trading opened. U.S. futures spiked early in response and that overnight strength persisted throughout Monday’s session. The gains were broad based and the Dow’s 1.2% bested 1.1% gains for the Nasdaq and S&P. The S&P’s sector performance showed, however, that the relief related to North Korea was only part of the story. Financial companies finished atop the index with all 11 sectors gaining and the S&P closing at 2,488, its 31st record close of 2017. Insurance companies rallied after Irma’s devastation appeared not to rise to worst-case levels feared or previously priced in and banks cheered a climb in Treasury yields. With funds flowing back into equities, Treasury yields remained under pressure and extended their overnight rise. The 2-year yield rose 5.7 bps (1.32%) in the biggest single-day increase since February. The 5-year yield rose 7.6 bps (1.71%), the biggest daily jump since January 18. The 10-year yield closed up 8.0 bps (2.13%) and the Dollar rebounded from Friday’s 32-month low.