Oil prices were at their highest levels in months, and disappointing wholesale-inflation data have sent benchmark 10-year yields closer to the key 5% level
Treasury Secretary Scott Bessent speaks at the 2026 Republican National Convention on Sept. 9. The Trump administration is trying to control rising yields.
U.S. Treasury yields were surging early Thursday as traders are growing more anxious about the latest jump in oil prices and inflation data.
The benchmark 10-year Treasury yield BX:TMUBMUSD10Y shot up 7 basis points, to 4.91%, putting it in jeopardy of hitting the 5% threshold.
That level matters for investors, because the stock market has been vulnerable when 10-year yields have held above 5%.
"If we take out this 4.95% level, I think we are going to 5%," Tom di Galoma, a managing director at Mischler Financial Group, said Thursday morning.
Inflation is a problem, with Brent crude-oil futures (BRN00) rising close to $105 on Thursday, di Galoma said. "So, really, everything is just coming down to higher inflation."
More broadly, higher yields matter because they increase the cost of capital. That's crucial right now because major technology and semiconductor companies at the heart of the artificial-intelligence boom have been driving the stock market's big gains over four years.
The AI build-out heavily hinges on borrowing, while major world economies must compete for dollars as they borrow to fund large deficits.
That tension added to the summer surge in U.S. bond yields, which prompted Treasury Secretary Scott Bessent in August to intervene with plans to increase Treasury buybacks of long-dated bonds to keep a lid on rates.
Bond traders were underwhelmed Wednesday when Bessent indicated that the first of a series of buyback operations through early November would be only up to $6 billion.
The first operation of the series is due Thursday afternoon. But there's also a 30-year Treasury auction on tap during the session.
Stocks were lower for a fourth day on Thursday, with the Dow Jones Industrial Average DJIA off 0.4%, the S&P 500 SPX 0.4% lower and the Nasdaq Composite Index COMP down 0.5%, according to FactSet.
-Joy Wiltermuth