Global stocks and bonds saw declines today as a rally in bonds fizzled out and investors doubted the Treasury's plan to curb borrowing costs would be a long-term solution. The S&P 500 extended its weekly drop, with the index falling 0.8%, the Nasdaq Composite down 1%, and the Dow ending the day lower by 700 points or 1.3%. Walmart Inc. was a significant drag, sinking 9% on disappointing sales figures.
Bond yields surged, with the 10-year Treasury bond yield reaching 4.71% and the 30-year yield spiking to 5.267%. This occurred despite Treasury Secretary Scott Bessent hinting at larger bond repurchases, potentially exceeding the originally announced $4 billion. Analysts from ING described the Treasury's move as "like rearranging deckchairs on the Titanic," citing the country's growing national debt, which recently topped $40 trillion. JPMorgan Chase & Co. noted that the Treasury's maneuver only addressed symptoms rather than the root cause of a 6% deficit in an economy near full employment.
Oil prices accelerated, with U.S. crude oil briefly touching $89 per barrel before closing at $87.83, up 2.3% for the day. International benchmark Brent also rose over 2% to close at $93.78. This surge followed President Donald Trump's threat of "economic warfare" on Iran, fueling concerns about inflation and supply disruptions. The national average gas price jumped another 2 cents to $4.10 per gallon.
San Francisco Fed President Mary Daly suggested that the Treasury market indicates monetary policy is currently in a good place, and she sees no risk to the Fed's credibility or an immediate need for preemptive rate hikes. However, analysts from Evercore ISI believe the impact of the Treasury's actions will likely be short-lived unless fundamental changes occur, and they also suggested that increased Treasury activism could make the dollar less attractive, with the dollar index falling nearly 1% since Wednesday morning. Bitcoin, however, saw a significant rise, topping $72,000, and Ether also increased by 5.9% to $2,348.2.
