Stocks Hit By Treasury Bond Market 'Melt Up'

NEW YORK (Oct 21) US equity futures moved lower Friday, amid one of the longest sell-offs in the Treasury bond market on record, as investors continue about the impact of Federal Federal Reserve rate hikes on a fragile global economy.

Benchmark 10-year Treasury note yields hit a fresh fourteen year high of 4.297% in early New York trading, extending one of the longest weekly stretches of declines since 1984 that has added more than 28 basis points to the paper in just over five trading days.

A better-than-expected reading for weekly jobless claims yesterday, which fell by 12,000 to around 214,000, set against more than 10 million unfilled positions in the world's biggest economy are cementing the case for a fifth jumbo rate hike from the Fed in December, with the chances of a 75 basis point move next month in Washington a virtual lock, according to the CME Group's FedWatch.

"The Fed meeting is still a week further away, but here US money markets have for the first time started to price a terminal rate of 5% for the Fed Funds effective rate," said ING analyst Padhraic Garvey. "To be sure, the market is still pricing the Fed turning towards cuts later next year, but Fed officials are pushing against that notion."

The move higher in yields, which has taken 2-year notes to 4.622% -- some 2.8% higher than the dividend yield on the S&P 500 and the biggest gap since 2007 -- is adding more heft to the U.S. dollar index, which rose 0.6% against its global peers in New York trading to 113.545 as stocks in Asia and Europe traded in the red following last night's weaker close on Wall Street.

Tech stock declines added to the market's woes, following a warning on global corporate ad spending from messaging app maker Snap Inc. SNAP, with social media stocks moving sharply lower in pre-market trading.

The Street