The U.S. stock market will be open on Monday, Oct. 9, for Columbus Day and Indigenous Peoples Day. But the bond market won’t be, which is perhaps a bigger deal on Wall Street.
Since the federal government will be closed, the roughly $25 trillion U.S. Treasury market won’t open either. Neither will the broader U.S. bond market. No economic data is set for release nor are Federal Reserve staff due to speak.
“It should be a quieter day in the stock market,” said David Kelly, chief global strategist at JP Morgan Asset Management, by phone. It also might provide a bit of relief from the sharp selloff in financial markets.
Wall Street has been gripped by uncertainty with the sudden rise of long-term Treasury yields, likely triggered by more tough talk from the Federal Reserve about higher rates sticking around through 2024, and beyond.
More: How rapidly rising Treasury yields are shaking up financial markets — in 5 charts
Heavier Treasury issuance also could be a factor, or political chaos, or concerns about the U.S. debt load, or worries that longer Treasury yields that finance the U.S. economy could eclipse 5%, or worries that the U.S. could sink into a recession.
As bonds have sold off, so has the S&P 500 index
SPX,
which in the past week nearly tested a key 4,200 level.
See: Stock-market rout puts all eyes on 4,200 level for S&P 500
“Selling begets more selling,” was how Jack Janasiewicz and Garrett Melson, portfolio strategists at Natixis Investment Managers, summed up the recent Treasury-market tumult. They also view it as a “technically driven overshoot.”
Still, a day off on Monday for the bond market could give Wall Street a chance to brace for what comes next.
In a positive sign, the 10-year
BX:TMUBMUSD10Y
and 30-year
BX:TMUBMUSD30Y
Treasury yields on Thursday were finally edging back from some of the highest levels since the run-up to the 2007-2008 global financial crisis.
But they’re still high, around 4.7% and 4.89%, respectively, relative to history, and have been nearing the Fed’s short-term policy rate of 5.25%-5.5%, a 22-year high.
“Eventually,” Kelly at JPMorgan said, “The economy is going to stub its toe, fall into a recession, and the Fed will cut rates.”
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