By Niket Nishant and Rae Wee
Aug 20 (Reuters) – U.S. government bonds sold off again following a brief reprieve on Thursday, pushing yields higher and keeping stocks under pressure as investors questioned whether U.S. Treasury support measures would provide lasting relief.
Yields on the 30-year U.S. government bond rose 5.4 basis points to 5.247% after falling to 5.1765% earlier, a day after the Treasury’s pledge to buy back more longer-dated debt stalled a sharp decline in bond prices. Yields move inversely to prices.
The moves were being closely watched to gauge markets’ faith in the U.S. Treasury’s ability to stem a rout that has sent shockwaves across multiple asset classes.
Stocks were mixed, with the MSCI index of global stocks up 0.3% after falling for four consecutive sessions, its longest losing streak since March, and U.S. major indexes lower across the board. The Nasdaq fell 1% and the S&P 500 dropped 0.9%.
“The buyback announcement is more of a band-aid than a panacea. But it is a reminder that the Treasury Department is paying attention and will do whatever it can to keep yields from getting too high too quickly,” said Lawrence Gillum, chief fixed-income strategist at LPL Financial.
The benchmark 10-year yield rose 4.7 bps to 4.7%, following a 5 bps fall on Wednesday. Yields on government bonds in Germany and Japan, however, eased.
SOUR SENTIMENT WEIGHS ON STOCKS
The pan-European STOXX 600 slipped 0.12%. Higher bond yields often pressure stocks.
Elevated oil prices also hit sentiment. Brent crude futures rose 2% to $93.49 a barrel as disruption in the Strait of Hormuz showed few signs of easing. [O/R]
“You’re hitting a point where inventories can become a problem,” said Tom Samuelson, chief investment officer at Vineyard Global Advisors.
U.S. stockpiles of distillate fuel, including diesel and heating oil, have fallen for three consecutive weeks. Still, crude and gasoline inventories rose last week. …
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