Wall Street is hoping to avoid the third-stright triple-digit loss for theDow Jones Industrial Average—after stocks sank for a second day as the 10-year Treasury yield fell below the key 2.50 percent level.
At the start of the year, Okada—and most market-watchers—had predicted bond yields were going to go higher as the Federal Reserve continued tapering its asset purchases, which have been reduced in four, $10 billion moves to a pace of $45 billion a month.
But bond yields keep falling, while investors keep buying Treasurys.
“The markets are bigger than the Fed in the short term,” Okada said. “Demand for Treasurys is still high, but the supply may be shrinking as the government has to borrow less.”
With bond yields dropping, the Dow had its worst day Thursday in five weeks—losing 1 percent to close at 16,446. The S&P 500 lost nearly 1 percent to finish at 1,870. The stock market is being hurt by a number of factors, including worries about economic growth in the United States and abroad.