A bond rally, sparked by the US Treasury's plan to curb borrowing costs, quickly fizzled out, and stocks declined amidst inflation worries fueled by higher energy prices. Thirty-year yields rose despite Treasury Secretary Scott Bessent signaling potential for larger buybacks and an upcoming fiscal plan. The S&P 500 dropped 0.9%, with Walmart Inc. experiencing its biggest decline since 2022 due to disappointing sales. Oil prices settled near $88 a barrel following President Donald Trump's threats against Iran, while Bitcoin surpassed $72,000.
Treasury Secretary Bessent downplayed Thursday's market movements, characterizing them as "noise." He also indicated that expanded buyback operations could exceed the initial $4 billion planned to start the following month. This move by the Treasury is part of a series of decisions reflecting growing concern over rising long-term yields, which are impacting the broader economy after years of high inflation and government spending.
However, some analysts, like Krishna Guha at Evercore, view the intervention as a "band-aid" rather than a long-term solution, stating that it changes little in terms of fundamentals and that the increased buyback size is modest compared to the overall Treasury market. Lawrence Gillum of LPL Financial echoed this sentiment, suggesting the "Bessent put" would likely fail to keep yields down from multi-decade highs over the longer term. The yield on 10-year Treasuries advanced five basis points to 4.70%, and 30-year Treasuries increased six basis points to 5.25%. The Bloomberg Dollar Spot Index remained largely unchanged, while West Texas Intermediate crude rose 2.3% to $87.83 a barrel.
The S&P 500 fell 0.9%, the Nasdaq 100 dropped 0.7%, and the Dow Jones Industrial Average declined 1.3%. The MSCI World Index also saw a 0.6% decrease. In currencies, the euro was unchanged at $1.1677, the British pound rose 0.2% to $1.3630, and the Japanese yen fell 0.6% to 159.10 per dollar. Spot gold increased 0.2% to $4,524.24 an ounce.
