What makes the record-low Treasury yield something of an oddity is that the USA economy – the world’s largest – still looks relatively sturdy, far more so than most other major economies.
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Netflix fell after a Jefferies & Co. analyst said its USA subscriber growth may be slower than expected.
The post-Brexit uncertainty has also created a rush into the safety of U.S. Treasury bonds.
HANGING UP: Phone company stocks took the biggest losses.
The 10-year Japanese government bond yield TMBMKJP-10Y, -4.48% also fell, hitting a record low of minus 0.275%.
THE QUOTE: After Tuesday’s decline in stocks and surge in bond prices, investors felt confident enough to buy slightly riskier stocks.
It was an abrupt end to a big four-day rally for stocks, and a reminder that the effects of Britain’s vote to leave the European Union has left markets deeply unsettled.
“Investors are continuing to digest the implications of Brexit and while, yes, monetary policy remains easy there are still these other shocks, which the U.S.is largely insulated from but they still affect risk sentiment”, he said.
America, however, was already enjoying historically low interest rates before Brexit became a reality, but now that British voters officially made a decision to leave the European Union, mortgage rates are forecasted to go even lower.
The U.S. 10-year yield has now fallen by almost a full percentage point since the start of this year. Nortek stock jumped $24.55, or 39.3 percent, to $87.04.
Technology companies Facebook and Cisco Systems also rose, but Netflix lost 3.4 percent after investment bank Jefferies highlighted tepid subscriber growth in the U.S. as a worry. Online retailer Amazon rose $9.51, or 1.3 percent, to $737.61 and used auto dealership CarMax gained $2.69, or 5.6 percent, to $50.45. Considered a safe investment, they are the best-performing sector on the S&P 500 over the last month, and AT&T and Verizon are both trading at long-time highs.
GOLDEN: The price of gold rose $11.30 to $1,370 an ounce, and silver gained 17 cents to $20.08 an ounce.
Copper, meanwhile, fell 3 cents to $2.15 a pound.
“The pound is sold, the euro is sold, and the yen is the most widely bought currency amid the risk-off mood”.
In the wake of the news surrounding Brexit, Erin Lantz, Zillow vice president of mortgages, said, “We expect mortgage rates to reach historic lows in the wake of the Brexit vote, as investors flock to relatively safer investments in USA mortgage-backed securities”. The Energy Information Administration said stockpiles rose by 1.4 million barrels. Brent crude, used to price worldwide oils, added 35 cents to $48.31 a barrel in London. That was a surprise to analysts, as Platts says they expected gasoline stockpiles to fall by 900,000 barrels.
The yen USDJPY, -0.63% rose to around 101 to the dollar in Wednesday afternoon Tokyo trading, up from around 102 yen to the dollar a day earlier. Marathon Petroleum fell $2.28, or 5.9 percent, to $36.50 and Valero Energy fell $1.18, or 2.4 percent, to $48.66. Phillips 66 slumped $2.52, or 3.2 percent, to $75.41.
OVERSEAS: France’s CAC lost 1.9 percent and Germany’s DAX shed 1.7 percent while Britain’s FTSE 100 fell 1.2 percent. Tokyo’s Nikkei 225 and South Korea’s Kospi each skidded 1.9 percent.
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Wall Street turned upward to show modest gains after the release of positive US economic data and a turn higher in oil prices. Hong Kong’s Hang Seng index slid 1.2 percent.
