Bond yields jumped Thursday, erasing the declines stemming from of the Treasury Department\u2019s unusual intervention in the debt market a day earlier.<\/p>\n
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 5.267%, rising just above the level yields were at when the Treasury Department\u2019s action Wednesday.<\/p>\n
As those yields rose, stocks also dropped at the opening bell. The S&P 500 dropped 0.3% and the Nasdaq Composite fell 0.8%. The Dow fell 400 points.<\/p>\n
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 \u201ceconomic warfare\u201d on Iran. Gas prices also rose: The national average jumped another two cents from Wednesday to $4.10 per gallon.<\/p>\n
The Treasury Department\u2019s 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\u2019s move would have in the long-run.<\/p>\n
ING analysts said the move was \u201clike rearranging deckchairs on the Titanic,\u201d given the country\u2019s growing debt.<\/p>\n
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\u2019s greatest expense.<\/p>\n
\u201cAbsent 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 \u2018regular and predictable\u2019 tenet,\u201d JPMorgan Chase\u2019s global rates team wrote in a note late Wednesday.<\/p>\n
The timing of the announcement was \u201chighly unusual,\u201d they added, since it came only two weeks after the Treasury had released its funding plan. \u201cWe can find nothing in market functioning that would force\u201d the announcement, JPMorgan\u2019s team added.<\/p>\n
Padhraic Garvey, ING\u2019s regional head of research for the Americas, agreed, calling it \u201cquite unexpected.\u201d<\/p>\n
Ed Yardeni, president of Yardeni Research, said Wednesday he saw the move by Treasury Secretary Scott Bessent as a signal \u201cthat he will do whatever it takes to keep a lid on bond yields.\u201d<\/p>\n
Bessent has been intensely focused on bond yields and the knock-on effect they have for consumers since President Donald Trump\u2019s second term began. Consumer borrowing rates move in lockstep with the yield on the 10-year Treasury note.<\/p>\n
The average 30-year fixed mortgage rate posted a small drop on Wednesday, according to Mortgage News Daily data. That decline is now likely to be reversed later Thursday.<\/p>\n
Asked Wednesday afternoon whether Americans should be concerned about the bond market, Trump told reporters, \u201cNo, I don\u2019t think so.\u201d<\/p>\n
The Treasury Department did not respond to a request for comment on Thursday morning.<\/p>\n