2 hrs ago
Treasury Yields Hit 19-Year High as Stocks Tumble
US government borrowing costs jumped sharply on Wednesday.
The 10-year Treasury yield reached 5.13%, its highest level since 2007.
Mortgage rates rose too, making home loans more expensive.
New data showed that businesses were growing quickly and paying more for materials and transportation.
Investors worried that these higher costs could cause inflation to rise again.
They therefore expected the Federal Reserve to keep raising interest rates.
Higher rates can make it harder for companies to invest and can reduce the value of stocks.
Concerns about oil supplies and a possible US diesel-export ban added to the worries.
As a result, major US stock indexes fell.
The 10-year US Treasury yield rose to 5.13%, its highest level since 2007.
The average 30-year fixed mortgage rate climbed to 7.26%, while five- and 30-year Treasury yields reached pre-2008 levels.
Stronger-than-expected US business data and faster input-cost growth revived concerns about inflation and further Federal Reserve rate increases.
The S&P 500 fell 0.8%, the Dow dropped 352 points, and the Nasdaq declined 1.1%.
Renewed energy-market concerns and President Donald Trump’s proposed diesel-export ban added to market uncertainty.
- Who
- US investors, the Federal Reserve, President Donald Trump, businesses, and stock-market participants were central to the developments.
- What
- Treasury yields surged, mortgage rates increased, and major US stock indexes declined.
- Where
- The developments affected US financial markets; related comments and events took place in Chicago, New York, and near the Strait of Hormuz.
- When
- The moves occurred on Wednesday, after the release of fresh economic data.
- Why
- Stronger business activity, faster input-cost growth, expectations of further Federal Reserve rate increases, and renewed energy-market concerns pressured bonds and stocks.
Further Rate Increases
Higher-Rate Risks
Federal Reserve policy
Further Rate Increases
Federal Reserve Governor Michael Barr said the risks of missing the inflation goal had increased and that more rate changes would likely be needed to bring inflation back to target.
Higher-Rate Risks
Investors and rate-sensitive sectors faced higher borrowing costs, threatening stock valuations, mortgages, and spending on projects such as AI data-center infrastructure.
US diesel exports
Further Rate Increases
President Donald Trump supported pursuing a ban on US diesel exports, arguing that the country should stop shipping diesel abroad.
Higher-Rate Risks
The American Petroleum Institute warned that a ban could reduce refinery production, harm the global economy, and raise prices for US consumers. Energy Secretary Chris Wright said an outright ban would not lower prices and was not under discussion.
Key facts
- 10-year Treasury yield
- 5.13%, the highest level since 2007
- 30-year mortgage rate
- 7.26%, according to Mortgage News Daily
- S&P 500
- Declined 0.8%
- Dow Jones Industrial Average
- Fell 352 points, or 0.7%
- Nasdaq composite
- Dropped 1.1%
- October rate-hike probability
- Above 70% by late Wednesday afternoon
- Business activity
- Reached its strongest pace in more than five years in the latest S&P Global purchasing managers’ index
Sources
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