Economist's Insights

Today’s Trading Activity – Stocks Reach New Records Treasury Rates Rise

Jan 9, 2018

Stocks had another record day but it was the jump in Treasury yields that may have been the biggest surprise on Tuesday. All three major indices claimed a new record-high close with the Dow’s 0.41% gain earning it the day’s best individual performance. The S&P rose a smaller 0.13% as four of eleven sectors improved but managed to keep its perfect start to 2018 intact. Health care companies rose the most while financials finished in second place. Utilities, real estate, and telecommunications companies brought up the rear. The Nasdaq has matched the S&P’s strong start to 2018 going six for six on record closes. But as noted earlier, it was the sharp steepening of the Treasury curve that made some waves. The long end led a sell-off that pushed the related yields to their highest levels in some time. The 10-year yield rose 7.3 bps (biggest single-day spike since September) to 2.55%, its highest level since a five-day stretch in mid-March. The 30-year bond added 8.4 bps to 2.90%, its highest level since late October. The 5-year yield climbed 4.4 bps to 2.33%, an almost seven-year high. The 2-year yield remained well anchored, adding just 1.0 bps to 1.97%, which resulted in the curve steepening the most in a single day since November 2016. The spread between 2s and 10s rose to 58.1 bps.