The bond market is experiencing a widespread selloff, extending beyond the UK and impacting US markets as traders react to rising Treasury yields. The potential for yields to reach 5% has contributed to a negative turn in S&P 500 futures and the Stoxx 600, as investors weigh the implications of higher borrowing costs on corporate profitability. Additionally, a report suggesting that former President Trump may declare a national economic emergency to justify broad tariffs has further soured market sentiment, increasing uncertainty and risk aversion among investors.
The rising Treasury yields are making stocks less attractive compared to bonds, leading to declines in major stock indices. Tech stocks, in particular, are feeling the pressure due to their sensitivity to interest rate changes, which can affect their high growth valuations. The stronger dollar, a byproduct of rising interest rates, is also impacting global trade dynamics, adding to the challenges faced by multinational companies.
The Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (TMF), which aims to provide triple the daily performance of the ICE U.S. Treasury 20+ Year Bond Index, is currently trading at $37.21 as of 07:28 on January 8, down from its last close of $37.98. This decline reflects the broader bond market selloff and the heightened market volatility driven by tariff concerns and rising yields.