Bond yields jumped Thursday, erasing the declines stemming from of the Treasury Department’s unusual intervention in the debt market a day earlier.In early trading, the 10-year Treasury bond yield rose as high as 4.71%, its highest level since Tuesday.The 30-year yield spiked to as high as 5.627%, rising just above the level yields were at when the Treasury Department’s action Wednesday.As those yields rose, stocks also dropped at the opening bell.
The S&P 500 dropped 0.3% and the Nasdaq Composite fell 0.5%.The Dow fell 400 points.Meanwhile, oil prices accelerated again.
U.S.crude oil briefly touched $89 per barrel and international oil benchmark Brent rose to almost $95.
The move higher in energy prices came after Trump threatened “economic warfare” on Iran.Gas prices also rose: The national average jumped another two cents from Wednesday to $4.10 per gallon.The Treasury Department’s surprise announcement on Wednesday effectively meant that it would be a bigger buyer of longer-term bonds.
In the immediately aftermath, bonds rallied and yields dropped on that news.However, the impact was short lived, and many market watchers and investors cast doubt on the impact the Treasury’s move would have in the long-run.On Wednesday afternoon, the Treasury Department revealed that outstanding national debt topped $40 trillion for the first time.
Interest payments are on track to surpass Medicare as the government’s greatest expense.“Absent real fiscal consolidation, we fear the markets will view this action as lacking credibility, meaning this could contribute to higher term premium and yields over time should Treasury become more opportunistic in its approach to debt management and move further away from its ‘regular and predictable’ tenet,” JPMorgan Chase’s global rates team wrote in a note late Wednesday.The timing of the announcement was “highly unusual,” they added, since it came only two weeks after the Treasury had released its fundi...