A fresh leg of the global bond selloff knocked equities off record highs Wednesday morning, with the 30-year Treasury yield reaching 5.70% — its highest level since 2002 — hours before the Federal Reserve was due to publish minutes from its September meeting.
Long End Does the Damage
The Dow Jones Industrial Average fell 518.58 points, or 1.01%, to 51,002.70 in morning trading. The S&P 500 slipped 0.62% to 7,770.54 and the Nasdaq Composite dropped 0.77% to 27,388.59. The small-cap Russell 2000 lost 1.00% to 2,801.98.
The declines came one session after the S&P 500 and Nasdaq both closed at record highs. On Tuesday the Dow had risen 253.14 points to 51,521.04 and the S&P 500 gained 0.6% to finish at 7,818.95, helped by easing concerns over oil supply.
That calm did not survive the open. The 10-year Treasury yield pushed to 5.35%, near the 24-year highs it set last week, while the long bond's move to 5.70% did the heavier damage to equity valuations. The pressure is not confined to Washington: France's 10-year yield has climbed toward 5%, also a 2002 high, and the spread between French and German borrowing costs has stretched toward levels last seen during the eurozone debt crisis, according to the Irish Times. The euro fell 0.63% against the dollar to $1.1187.
Energy added to the inflation anxiety. November WTI crude rose 1.14% to $90.46 a barrel and Brent held above $101.
Minutes Meet a Changed Picture
The Fed raised its target range to 3.75%–4.00% on September 16 in a 12-0 vote, and the median dot projected one more increase before year-end. The minutes of that meeting are scheduled for release at 2 p.m. ET Wednesday.
The data since then have cut the other way, and traders have repriced accordingly. CME FedWatch now puts the odds of an October 28 hike near 22%, down from roughly 38% a week ago and close to 71% a month ago. The December 9 meeting is where the tightening bet has migrated, at an 86.2% implied probability.
Officials are not speaking with one voice. New York Fed President John Williams has said he sees no need to rush further increases while still calling one more hike this year reasonable; Vice Chair Michelle Bowman has signaled a preference for no additional hikes in 2026. The September projections showed the split plainly for 2027: eight participants penciled in two or more increases, six saw one, and four projected cuts.
Chair Kevin Warsh set the bar at Jackson Hole in August. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed," he said. "Otherwise, we have work to do."
Metals and Single Names
Precious metals extended their slide as the dollar firmed and real yields rose. Gold fell 1.49% to $4,124.60 an ounce, a two-month low, and silver slipped about 1.1% to roughly $60.68. Gold is down 5.38% over the past month; silver has lost 7.71% in that span but remains 24.19% higher than a year ago.
Among individual names, Constellation Brands fell 5% despite second-quarter revenue of $2.63 billion that beat the $2.54 billion consensus. Nvidia, which led Tuesday's record run, eased 0.23% to $238.69.
Sources: Yahoo Finance, Trading Economics, CME FedWatch, InvestingLive, MUFG Research, Irish Times, Federal Reserve Board, Mitrade