Bond Report: U.S. 30-year bond yield tops 5% as Washington dysfunction rattles investors

by | Oct 4, 2023 | Stock Market

Bond yields rose sharply early Wednesday, with benchmarks hitting fresh 16-year highs, amid concerns the Federal Reserve will keep interest rates higher for longer as buyers balked at political chaos in Washington.What’s happening
The yield on the 2-year Treasury
slipped by 2.5 basis points to 5.159%. Yields move in the opposite direction to prices.

The yield on the 10-year Treasury
rose 2.7 basis points to 4.831%.

The yield on the 30-year Treasury
added 2.8 basis points to 4.955%.

What’s driving markets U.S. government bonds have been under severe pressure in recent weeks as better-than-expected economic data of late encouraged Fed officials to continue their hawkish rhetoric, insisting it was likely interest rates may have to rise again and stay at elevated levels for longer than investors had until recently hoped. Job openings data released Tuesday exacerbated those fears.

“This fresh bout of anxiety has been prompted by new jobs data in the U.S. indicating that vacancies unexpectedly jumped in August,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. The trend accelerated as European traders got to their desks early Wednesday, with yields also propelled higher by concerns that the first ever ousting of a speaker of the House of Representatives presented a picture of dysfunction from a government that expects to sell about $850 billion of debt in the last three months of the year. “Fresh turmoil in Washington isn’t helping…This not only bodes ill for future debate on the debt ceiling, with fresh impasse expected, but this bout of political dysfunction could have much wider policy repercussions,” Streeter added.

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