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Peter Davis

An writer at FOMOdrive

  • Oct 23, 2023
  • 2 min read

“Red October” in the markets: US government bond yields reached 5%

Markets remain in the red as "Red October" persists.

The 10-year US government bond yield rose to 5%.

For the first time since August 1, the price of gold has gone above $2,000 per ounce.

Reuters reported that last week, benchmark 10-year US Treasury yields rose to 5%, the highest level since 2007, due to escalating tensions in the Middle East. This caused investors to seek out safe investments, leading to the continuation of the "Red October" trend in global markets.

RBC Capital reported that last week, the S&P 500 dropped by more than 2%, and the VIX fear index closed above 21 for the first time since March.

After Elon Musk warned of demand issues and China's restrictions on graphite exports, Tesla shares dropped, which did not improve the outlook in Europe. Shares there experienced a 3% decrease for the week, and borrowing costs were projected to increase the most since July.

Tuesday is set to be a big day, with Microsoft and Alphabet releasing their third-quarter results. Wednesday will see Meta report, and Amazon will follow suit on Thursday.

The stocks of Apple, Nvidia and Tesla have been responsible for the majority of the 11% increase in the S&P 500 this year, so any letdown in their results could have serious repercussions.

MSCI's main Asia-Pacific index dropped to 11-month lows due to the troubles in the Middle East and increasing global borrowing costs, as well as other factors.

On Friday, gold futures for December delivery exceeded $2,000 an ounce for the first time since August 1. This surge in price is attributed to the increased demand for defensive assets due to the escalation of conflict in the Middle East. Since the outbreak of hostilities between Hamas and Israel on October 7, gold has risen by more than 8%.

Fears have been raised that the war between Israel and Hamas could become more than a regional crisis, potentially leading to a long-term conflict.

It is anticipated that the Federal Reserve will maintain interest rates at their current level during the November 1 gathering, which is providing a boost to gold prices.

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