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The stock market took another step lower Friday, as Treasury yields continued to rise to levels not seen in over a decade.
Today's drop brought the Dow below the important 30,000 mark and this close to bear-market territory, which is defined as a 20% drop from the most recent high (or its Jan. 3 peak at 36,585.06, in this case). The blue-chip index is the only one of its major market peers to have not crossed that threshold (the Nasdaq, remember, entered a bear market on March 7, and the S&P 500 on June 13).
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"Financial markets are now fully absorbing the Fed's harsh message that there will be no retreat from the inflation fight," says Douglas Porter, chief economist at BMO Capital Markets. "The steep back-up in global rates further bludgeoned stocks, resource prices, and commodity currencies this week, given mounting recession odds," he added.
While yields on government bonds came off their earlier highs, they are still hovering at levels not seen in over 10 years (2011 for the 10-year note and 2007 for the two-year). Specifically, the 10-year Treasury yield hit a session peak of 3.829% before settling at 3.695%, while the 2-year Treasury yield climbed as high as 4.27% before ending at 4.201%.
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As for the equities marke
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