Ahead of the U.S. Treasury auction, yields continued to climb. Markets traded lower on Tuesday, while Asia-Pacific markets opened lower in Wednesday morning trade. Samsung (SSNLF) managed to trade slightly higher, despite issuing a profit forecast for the fourth quarter that did not meet expectations.
High U.S. treasury yields compete for investor money. Instead of paying a premium for over-valued stocks, investors could hold risk-free debt and earn 5.0%. For the same reason, speculative firms like Tesla (TSLA) lost 4.06% yesterday. Palantir (PLTR), whose price-to-earnings ratio is 354 times, dropped by 7.81%. In the media sector, Disney (DIS) fell slightly while Warner Bros Discovery (WBD) fell by 2.96%. Warner is hiking subscription prices by $1.00. The firm is assuming that consumers will not cancel their subscriptions. However, if they are sensitive to higher prices, the firm will report lower revenue growth.
Although the market has already given back some of its year-to-date gains, drops of around 2.0% will not scare investors. The S&P 500 (SPY) will need to fall by at least 10% before fear takes over the market. Until then, speculators may profit by trading on the daily volatility.
Bond investors should be wary of buying long-duration debt. The 20+ Year Treasury Bond ETF (TLT) lost nearly 11% in the last year. It may keep falling as the U.S. raises its debt ceiling, increases government spending, and slows its rate-cutting plans.
