The U.S. stock market will be open on Monday, Oct. 9, for Columbus Day and Indigenous Peoples Day, but the bond market won’t be which is perhaps more significant for Wall Street.
Since the federal government will be closed, the roughly $25 trillion U.S. Treasury market won’t open either and neither will the broader U.S. bond market. No economic data is set for release nor are Federal Reserve staff due to speak.
“It should be a quieter day in the stock market,” said David Kelly, chief global strategist at JP Morgan Asset Management, by phone. It also might provide a bit of relief from sharp swings in financial markets.
Wall Street has been gripped by uncertainty with the latest rise in long-term Treasury yields, likely triggered by more tough talk from the Federal Reserve about higher interest rates sticking around through 2024, and beyond.
More: How rapidly rising Treasury yields are shaking up financial markets — in 5 charts
Heavier Treasury debt issuance also could be a factor, or political chaos in Congress, or concerns about the U.S. debt load, or worries that longer-dated Treasury yields that finance the U.S. economy could rise above 5%, or fears that the U.S. economy could sink into a recession.
Recently, as bonds sold off so did the S&P 500 index
SPX.
Except on Friday stocks
DJIA
COMP
jumped after a bigger-than-expected increase in U.S. payrolls for September ignited a rally in equities, even while 30-year Treasury yields were knocking on the door of 5%.
Most of the gains in job numbers for the month was in sectors of the economy that pay workers less, including restaurants, hotels and government jobs, which might not necessarily give investors an “inflationary signal,” said Jeffrey Roach, chief economist for LPL Financial.
But it also likely puts more focus on coming inflation data, including the consumer-price index due Thursday. “Expect some choppy markets in the meantime,” Roach wrote, in emailed comments Friday.
A day off on Monday for the bond market could give Wall Street a chance to brace for what comes next.
The 10-year
BX:TMUBMUSD10Y
and 30-year
BX:TMUBMUSD30Y
Treasury yields on Friday were at 4.783% and 4.941%, respectively, near the highest levels since the run-up to the 2007-2008 global financial crisis.
“Eventually,” Kelly at JPMorgan said, “The economy is going to stub its toe, fall into a recession, and the Fed will cut rates.”
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