The Dow Jones Industrial Average plunged more than 400 points today, pressured by a surge in U.S. Treasury yields. As of 9:10 p.m. Thailand time, the Dow was down 407.71 points, or 0.78%, at 52,013.49. Meanwhile, the yield on the 10-year U.S. Treasury note, the benchmark for setting rates on mortgages, auto loans and credit card debt, jumped to 5.041% today, the highest level in 19 years, or since 2007, as investors dumped U.S. Treasuries ahead of this week's Fed meeting amid expectations the Fed will raise interest rates at this meeting. The market is watching the Fed's monetary policy meeting on Sept. 15-16, as well as remarks by Fed Chair Kevin Warsh and the Fed officials' Dot Plot of interest rate projections, along with U.S. economic forecasts including gross domestic product, the unemployment rate and the inflation rate. The latest CME Group FedWatch Tool indicates that investors assign a 92.7% probability to the Fed raising rates by 0.25% at its Sept. 16 meeting and a 7.3% probability to the Fed holding rates steady at that meeting. Meanwhile, a CNBC survey of analysts found that most analysts expect the Fed to raise rates at least twice over the next year, and about one in three analysts expect the Fed to raise rates three times or more, a sharp shift from last month when only 46% of respondents expected the Fed to raise rates; that figure has now risen to 86%, and of those, 55% expect more than one rate hike.
Market expects the Fed to raise rates 25bp at the Sept 16 meeting (92.7% probability), pushing the effective fed funds rate higher.
10-year Treasury yield jumped to 5.041%, highest in 19 years, as investors dumped Treasuries ahead of expected Fed rate hikes.
