Government bond markets suffered a fresh spate of volatility on Friday, halting a rally in tech, after President Joe Biden said the US aimed to make vaccinations available to every adult by the start of May.

The yield on 10-year US Treasuries rose above 1.6 per cent, up sharply from about 1.54 per cent on Thursday, as investors sold the debt. It now sits near the 13-month high it struck during a choppy session a week ago. Yields on the 10-year UK gilt jumped 0.09 percentage points to 0.82 per cent.

The tech rally that powered US indices to record highs was thrown off course on Friday. The blue-chip S&P 500 index shed 0.4 per cent at the opening bell, while the technology-focused Nasdaq Composite lost 1.4 per cent.

The region-wide Stoxx Europe 600 fell 0.4 per cent in afternoon trading, while London’s FTSE 100 rose 0.3 per cent and Frankfurt’s Xetra Dax dropped 0.6 per cent.

The latest jolt of market jitters came after Biden said every US adult would be eligible for a Covid-19 vaccination by May 1, and touted “some real progress” in America’s fight against the pandemic in a televised address. The US president set the July 4 Independence Day holiday as a new target for a return to normality.

Bond markets have been volatile in recent weeks over the prospect that a swift US economic recovery would stoke inflation, which erodes the value of bonds’ interest payments. Those bond market nerves have spilled over into stocks.

Biden’s $1.9tn stimulus bill and the European Central Bank’s pledge to increase the pace of its bond-buying programme have launched “a wall of money coming like we haven’t seen since the second world war”, said Didier Rabattu, head of equities at Lombard Odier Investment Management. “The Nasdaq is made of growth companies, it’s a pretty volatile index. In this environment, when rates go up, investors reprice the value of growth.”

Analysts also point to big corporate debt offerings as contributing to the weakness in Treasuries.

“The current backdrop is that many non-rates investors are waking up to their rate risk exposure and the natural way to react is to hedge that risk,” said Antoine Bouvet, senior rates strategist at ING. “I think corporate deals weigh more on US Treasuries in the current environment.”

In Asia, China’s CSI 300 index closed up 0.4 per cent, Hong Kong’s Hang Seng fell 2.2 per cent and South Korea’s Kospi gained 1.4 per cent.



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