US stocks and bonds fell as initial relief over the Treasury's plan to curb borrowing costs faded, with investors questioning its long-term effectiveness. The S&P 500 extended its weekly decline, and Walmart Inc. shares sank due to disappointing sales. Thirty-year Treasury yields rose, even after Treasury Secretary Scott Bessent hinted at increased buyback potential and an upcoming fiscal plan. Brent crude oil prices hovered near $94 amid geopolitical tensions, and Bitcoin reached over $72,000.
Treasury Secretary Bessent downplayed the market's immediate reactions, characterizing them as "noise." He also indicated that the expanded buyback operations, set to begin next month, could exceed the currently planned $4 billion. Bessent announced that an increased focus on fiscal consolidation would be detailed at the end of the week or early next week.
Analysts expressed skepticism about the Treasury's actions. Jay Barry of JPMorgan Chase & Co. stated that the measure only addressed symptoms, not the underlying cause of a 6% US deficit in an economy near full employment. He warned that without genuine fiscal consolidation, markets might view the action as lacking credibility. Ulrike Hoffmann-Burchardi of UBS Chief Investment Office acknowledged the Treasury's focus on maintaining long-end stability but noted it wouldn't fundamentally alter the rate outlook. She maintained that the Federal Reserve is unlikely to raise rates this year if inflation moderates, although the option remains open if price pressures persist.
