U.S. stocks start September with a "black opening"! Technology stocks and long-term bonds decline, while gold and the U.S. dollar soar together
U.S. stocks had a poor start in September, with technology stocks and long-term bonds generally declining, while gold and the U.S. dollar rose. Wall Street is concerned about the technology stock bubble and the expansion of government budgets, with Nasdaq 100 index futures down 1.3%. NVIDIA led the decline in technology stocks, and S&P 500 index futures fell 1%. U.S. Treasury yields rose, and UK Treasury yields reached a new high since 1998. The market is focused on expectations for Federal Reserve interest rate cuts and upcoming economic data
According to Zhitong Finance APP, after the holiday, Wall Street is once again worried about the tech stock bubble and the expanding government budget. The global bond market generally fell, and gold prices briefly hit a historical high. The Nasdaq 100 index futures fell 1.3% on Tuesday, further exacerbating the sell-off triggered by tech stocks last week. NVIDIA (NVDA.US) led the decline among the seven major tech stocks, dropping 2.7% in pre-market trading. The S&P 500 index futures fell 1%. The dollar recorded its largest increase since July and is expected to see its first rise in six days.
The yield on 30-year U.S. Treasury bonds rose by 6 basis points to 4.99%, while the yield on 30-year UK government bonds reached its highest level since 1998. The UK raised a record £14 billion through the issuance of 10-year government bonds, with its expanding budget deficit becoming the focus. The pound fell by more than 1.3%.
Ultra-long-term bonds typically perform poorly in September.
French long-term bond yields also surged to their highest level since 2009. French Prime Minister François Bayrou is likely to lose a confidence vote next week as the opposition opposes the government's spending cuts.
Allianz Chief Economic Advisor and former CEO of Pacific Investment Management Company, Mohamed El-Erian, stated: "The yields on long-term government bonds in developed countries continue to rise, particularly in the UK, where the currency is also relatively weak—similar to the situation in developing countries."
David Zahn, head of European fixed income at Franklin Templeton, said: "I believe the long end of the yield curve should continue to rise as we have a massive fiscal deficit to fill."
This year's record stock market rally is entering a critical phase, as the market is about to witness whether the expectation of the Federal Reserve's first interest rate cut in 2025 can be realized this month, and whether the expectation of further rate cuts still exists. Tariff tensions and U.S. President Trump increasing pressure on the Federal Reserve may trigger inflation concerns, further intensifying market pressure.
A series of data will be released this week, starting with the U.S. August manufacturing PMI data to be announced tonight. The non-farm payroll report to be released on Friday is expected to show that job growth has fallen below 100,000 for the fourth consecutive month, marking the weakest period since the outbreak of the pandemic in 2020.
Currently, swap trading indicates a 90% probability that the Federal Reserve will cut rates by 25 basis points later this month, with three more cuts expected by June next year.
On Tuesday, the Volatility Index (VIX) rose by 15.5%, reaching an intraday high of 18.65, the highest level since August 5. The surge in volatility reflects heightened anxiety among investors as the market readjusts following a U.S. appeals court ruling that overturned most tariffs imposed during Trump's term late last Friday.
Andrea Tueni, head of sales trading at Saxo Bank France, stated: "As key U.S. inflation and labor market data approach, the market is generally cautious. This indicates that caution is needed in the future." ”
