Stocks declined and the 10-year Treasury yield remained steady at 4.5%, as investors assessed the potential impact of sustained high interest rates and a potential government shutdown. Moody’s Investors Service cautioned that a government shutdown, which could occur in a matter of days, may negatively affect the credit rating of the United States. Meanwhile, in Asia, a significant unit of troubled property developer China Evergrande failed to make a bond payment, increasing concerns about the sector and weighing on regional shares.
Looking ahead, Costco is scheduled to release its earnings after the market closes. Additionally, an updated second-quarter GDP reading is expected on Thursday, followed by consumer spending data and the Federal Reserve’s preferred inflation gauge on Friday.
In the US, all three major stock indexes dropped by more than 0.4%, with the Dow Jones Industrial Average falling nearly 150 points. At the same time, the 10-year Treasury yield slightly decreased from its highest level since October 2007. The WSJ Dollar Index also rose to its highest level since November of the previous year. Brent crude oil contracts fell for the sixth consecutive day, alleviating concerns about energy price surges fueling inflation and complicating the Federal Reserve’s task. In addition, both Asian and European markets faced declines due to worries surrounding China’s property market.