Stock Market Suffers Third Straight Loss as Bond Yields Hit 19-Year High
U.S. stock markets declined sharply on May 19 as Treasury yields surged to their highest levels in nearly two decades, with the 30-year yield briefly topping 5.19%. The sell-off reflects growing concerns about inflation persisting longer due to elevated energy prices from Middle East conflict disruptions.
Market Decline Accelerates Amid Bond Volatility
The S&P 500 fell 0.67% to 7,353.61 on Tuesday, May 19, its third straight losing session, as the 30-year Treasury yield briefly topped 5.19%, the highest in nearly 19 years. The 30-year Treasury yield briefly topped 5.19% on Tuesday for its highest level in nearly 19 years, while the 10-year Treasury note yield rose to 4.687% at one point, marking its highest level since January 2025.
Investor Concerns Over Inflation
With investors seeing a significant probability of a prolonged disruption of the strait, they are now expecting relatively high inflation, with the five-year breakeven rate increasing from 2.4% on the day before the conflict began to 2.69% recently—the highest level since early 2023.
Cash Levels Signal Caution
Investors are flooding out of cash to buy stocks, with collective cash levels dropping to 3.9% of portfolios, from 4.3%, which the firm considers a drop below 4.0% aggregate cash levels as a sell signal.