Treasury rates spiked on Wednesday to multiyear highs in what was the biggest one-day move for the 10-year Treasury yield in nearly 18 months. There were a number of reasons cited for the sudden move higher:
Much stronger-than-expected surveys on U.S. economic activity, especially in the manufacturing sector
Hawkish commentary from a top Federal Reserve official
A U.S. Treasury auction for five-year notes that was met with poor demand
Stubbornly high oil prices with WTI crude rising 2%
The 10-year Treasury note yield
popped more than 13 basis points to 5.104% and reached a level not seen since July 2007. The move gained steam after the 10-year yield broke through the key 5% level. It marked the benchmark yield’s biggest one-day move since April 7, 2025 — when it surged 16.6 points.
The 2-year Treasury note yield
, which is most sensitive to expected changes in Fed policy, jumped more than 11 basis points to 4.889% and hit its highest level since May 2024 as traders increased their bet the Federal Reserve would need to hike again in October.
The 30-year Treasury
yield gained more than 9 basis points to 5.398%. It hit the highest level since June 2007. One basis point is equal to 0.01%, and yields and prices move in opposite directions.
“This is the market telling us we’ve entered a genuine re-tightening cycle, said Tony Miano, global investment strategy analyst at Wells Fargo Investment Institute. “The Fed’s 25 basis point hike last week to 3.75%–4% was its first increase since 2023, and the dot plot signaled another this year.”
“A week ago you could argue that was a one-and-done insurance move or a one and maybe December hike). Today’s price action says investors no longer believe that,” he added. Bottom line, “you can’t fool or hide in the bond market – unless the Fed gets inflation under control the long end of the curve is going to continue to come under pressure.”
Read the rest here.
See also this for a more detailed discussion of the recent craziness in the markets.
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