There is 'sheer panic' in the bond market

Bonds are selling off sharply for a second day in a row.

This violent started Wednesday, as European Central Bank president Mario Draghi gave a press conference in which he said markets should get used to episodes of higher volatility.

Draghi also emphasised that the ECB has no plans to soon end its €60 billion bond buying program, or quantitative easing, before its planned end date of September 2016.

Bond yields, which move in the opposite direction to their prices, spiked across Europe on Wednesday, and on Thursday this move is continuing, with German bund yields and US treasury yields hitting new 2015 highs and continuing to climb overnight.

According to Bloomberg, bonds have wiped out all their gains for the year.

Tom di Galoma, head of fixed-income rates and credit at ED&F Man Capital Markets, told Bloomberg: “This is sheer panic in the market from the standpoint of what’s been happening in Europe … Most of Wall Street is guarded here as far as taking on new positions.”

And while stocks didn’t react much to the bond market on Wednesday, stocks are poised to open lower Thursday as the chaos spills over.

Near 7:50 a.m. ET, Dow futures were down 90 points, S&P 500 futures were down 12 points, and Nasdaq futures were down 35 points.

The benchmark US 10-year treasury yield pushed higher to around 2.42% overnight, a level it hasn’t touched since last October. German bund yields rose to around 0.99%.

About 6 weeks ago, the German 10-year bund was trading near 0.05% and the 10-year Treasury note was trading at around 1.9%.

NOW WATCH: 5 morning rituals to keep you productive all day long

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at