US Treasury Yields Surge Amid Vaccine Expansion... New York Stock Market Declines

Private Employment and Non-Manufacturing PMI Fall Short of Market Expectations

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] U.S. Treasury yields, which had briefly paused, surged again. This is attributed to President Joe Biden's announcement that he will secure enough COVID-19 vaccines for all Americans by May. The New York stock market opened lower amid concerns over rising yields. The economic indicators released that day fell short of market expectations.

As of 9:30 a.m. local time on the 3rd, the 10-year U.S. Treasury yield stood at 1.477%, showing a relatively large increase of 6 basis points (1bp=0.01%) compared to 1.413% the previous day.

With Treasury yields rising, the Nasdaq index, which is tech-heavy, is showing weakness again in the New York stock market. As of 10 a.m., the Nasdaq index was down about 1%. The S&P 500 index also fell 0.6%, and the Dow Jones Industrial Average declined about 0.1%.

The Wall Street Journal reported that as Treasury yields surged, investors were once again selling bonds and tech stocks.

CNBC reported that President Biden's announcement a day earlier that he would secure enough vaccines for all Americans by May, two months earlier than initially planned, fueled the rise in Treasury yields. The expectation that vaccine distribution will be accelerated and economic activity will resume faster pushed bond prices down.

The employment and economic indicators released that day failed to meet expectations. Private employment research firm ADP announced that 117,000 private-sector jobs were added in February. This is far below the expert forecast of 225,000 compiled by Dow Jones. In January, 195,000 private-sector jobs were created.

Nela Richardson, ADP's chief economist, explained, "The labor market recovery is generally delayed. Manufacturing employment expansion has stalled." She analyzed that although the manufacturing sector is recovering significantly, it is not translating into employment.

The Institute for Supply Management (ISM) announced that the non-manufacturing Purchasing Managers' Index (PMI) for February was 55.3, which is significantly below the market expectation of 58.3. ISM had earlier reported that the manufacturing PMI for February rose to 60.8 from 58.7 in the previous month.