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US stocks declined as bond yields rise and the US hedge fund crisis continues

30 Mar 2021 03:00 PM

US equity futures declined today as US Treasury 10-year bond yields rose to their highest in 14 months. During yesterday's trading, the Nasdaq Index declined, and the S&P 500 Index retreated from its record highs, while the Dow Jones Index closed at a new record high around 33,250 levels, despite the weakness of bank stocks due to the US Archegos hedge fund crisis.

The yields of 10-year US Treasury bonds rose to their highest level since January 2020 at 1.77%, as the launch of the Coronavirus vaccine, and the infrastructure spending plan unveiled by the US President, boosted hopes for a major recovery for the US economy. However, the move raised inflation concerns and put growth stocks, many of them tech stocks, under pressure as higher interest rates undermine the value of future earnings and put pressure on market valuations.

Regarding the hedge fund crisis, pressure has escalated on Credit Suisse due to the losses, which sparked the sale of bank shares yesterday. The reason behind the huge sale is the forced liquidation of the fund's exposures by several billion dollars.

According to some sources, global lenders may lose more than $ 6 billion, and Credit Suisse and Nomura Japan will bear the brunt of that, and the Swiss bank’s losses may reach only about $ 4 billion.

Shares of Credit Suisse rose 0.7% on Tuesday after falling 14% on Monday, lagging shares of other banks such as Deutsche, which rose 1.7%.

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