Finance

Strong economic data, including a solid S&P Global Manufacturing PMI, has prompted more hawkish sentiment among central bank leaders. New York Federal Reserve President John Williams and Governor Michael Barr signaled that additional interest rate hikes could be required this year to bring inflation back down to the target level. Consequently, the prospect of prolonged tighter monetary policy dampened short-term market sentiment.

The tech-heavy Nasdaq managed to trim its intraday losses and close nearly flat, bolstered by renewed interest in artificial intelligence. Meta led the recovery with a notable share gain after leadership unveiled concrete strategies to monetise its new consumer AI agent. However, analysts cautioned that rising yields could eventually make building out heavy AI data center infrastructure far more expensive.

In an effort to cool down the blistering yield rally, the U.S. Treasury conducted a regular long-term bond buyback operation. Although Treasury Secretary Scott Bessent raised the cap to $6 billion, the department ultimately rejected the majority of offers from dealers and only purchased $4.08 billion in debt. Because investors viewed the accepted values as too low, yields quickly bounced back toward multiyear highs following the announcement.