US stocks, US dollars and bonds all hit during trading sessions on Thursday as economic uncertainty grew. The Dow fell 1.91%. The wider S&P 500 slides 1.61%, while the high-tech Nasdaq composites fell 1.41%. Each of these performances was the worst on each index in the past month. Most US stocks were also soaked on Thursday.
This fall was attributed to weak demand at auctions for Treasury bills in 2020. The Treasury sold 20-year bonds worth $16 billion, and the auction settled at over 5% on 20-year Treasury yields. There is also weak demand for the US Treasury Department, as Wall Street has already shocked the possibility of President Donald Trump’s “big and beautiful” tax bill.
This bill is expected to do more harm than good. In addition to the deficit, we expect to put pressure on federal debt burdens at a time when uncertainty about the safe state of American assets increases.
US inventory pressure is rising
Furthermore, higher bond yields can seduce investors, pull them away from other assets, and put pressure on the stock market. The shares ended Thursday as Republicans try to move forward with the tax bill. Chip Hughey, managing director of bonds at Truist Advisory Services, said: “Recent budget deliberations in Washington do not provide global investors with these challenges embedded in the decision-making process.”
Last week was good for the stock market, but ended on a six-day Tuesday at Green. In response, the Wall Street fear gauge, CBOE Volatility Index, has risen by more than 15%. The US dollar index, which measures the dollar’s strength against six major foreign currency, slipped by 0.5%, raising concerns about the future of the US dollar, which is already facing foreign resistance.
