Marketmind: Risk and rates moving in tandem

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Both long-term borrowing rates and riskier growth stocks of the Big Tech universe have climbed in tandem this week, a peculiar coincidence in price trends that typically offset each other. While it's often dangerous to over-interpret a few days of market developments, some argue investors are gradually pricing a more durable high-pressure economy ahead - one where demand and earnings growth stay brisk and keep credit policy and interest rates tight over the horizon. Either way, it was enough to hand Wall St stocks their best day of the month on Monday just as 10-year Treasury yields eye recent 15-year highs again above 4.3% ahead of today's auction of new 10-year paper.

Traders work on the floor of the NYSE in New YorkBoth long-term borrowing rates and riskier growth stocks of the Big Tech universe have climbed in tandem this week, a peculiar coincidence in price trends that typically offset each other.

Curiously, it was the traditionally most interest-rate sensitive sectors that led Monday's stock rally, with the NYFANG+ index of mega cap tech and digital giants clocking a daily gain of more than 2% for the first time in September. Recovering somewhat from the China-related hit last week, Apple stock also rebounded as it prepared to launch its latest iPhone on Tuesday and signed a new deal with chipmaker Qualcomm for the supply of 5G modem chips at least until 2026 - before a previous agreement ends this year.

Overseas, European markets held up as this week's European Central Bank meeting is awaited with economists split on its outcome.

 

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