The Rising Stakes of the Global Bond Rout

ImageAndrew here.What does the bond market know that the stock market does not? And which one is right? Bond investors are clearly becoming more worried about the economy — and yet the stock market is showing almost no sign of that anxiety.DealBook’s Bernhard Warner gets into all of the details and some of the implications for Washington and beyond.

More below.Higher for longer Borrowing costs have been climbing for some time.But in recent days, long-rated bonds have hit multiyear highs, heaping pressure on governments, businesses and households.Stocks and bonds are rebounding slightly on Wednesday.

Yet the higher-for-longer debt narrative looks set to stick, weighing on even deep-pocketed corporate giants.The latest:The yield on the 10-year Treasury note, which underpins many home mortgages and commercial loans, dipped to 4.697 percent.On Tuesday, the yield hit a 20-month high.The S&P 500 futures are barely in the green on Wednesday.

But the benchmark index is on a three-day losing streak amid debt jitters.Chip stocks sold off sharply in the U.S.on Tuesday and on Wednesday in Asia, as investors begin to worry about the sector’s growth prospects if the debt-fueled artificial intelligence spending spree slows.Worth watching: The Treasury Department is set to sell $16 billion in 20-year government debt on Wednesday.

Tepid demand could add more volatility to the market, and pile pressure on Treasury Secretary Scott Bessent.With bond yields rising, Washington’s exorbitant borrowing needs have come into sharper focus, especially with the U.S.federal debt set to hit $40 trillion.Bond investors are already spooked, including by inflation, surging government debt, aging demographics and newer concerns like a “climate sovereign doom loop.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access.

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