Wall Street winces at bond squeeze
SPY•Wall Street stocks pulled back as Treasury yields hit a 24-year high and Fed minutes showed most policymakers saw more rate hikes ahead. The 10-year Treasury term premium rose to its highest level since 2014.
1. Bonds weigh on markets
Stock markets stalled Wednesday and early Thursday as the bond crunch continued. Markets still see three more Fed rate hikes over the coming year, starting in December, while Fed Governor Christopher Waller said further increases will likely be needed to bring inflation to the Fed’s 2% target.
2. Yields and term premium rise
The 10-year Treasury auction on Wednesday went smoothly after yields hit another 24-year high earlier that day. The term premium on 10-year debt rose to its highest level since 2014, reflecting concerns about debt levels, political risks and uncertainty around government financing.
3. AI financing in focus
Wall Street stocks pulled back after reaching records earlier in the week, with investors turning their attention to earnings and debt financing tied to the AI buildout. Reports detailed financing between Broadcom and OpenAI, while Broadcom and Anthropic were also discussing debt financing on a similar scale; TSMC's quarterly revenue beat forecasts, and Samsung reported operating profit up more than 700% year over year.
