The US bond market is tanking the stock market
The S&P 500 slumped more than 1% on Wednesday afternoon.
After clawing within spitting distance of positive territory in the morning, stocks sputtered hard early this afternoon, with the S&P 500 (and SPDR S&P 500 ETF) tumbling to losses of more than 1% on the day.
The sell-off coincided with a sharp rise in long-term yields on US government bonds, which spiked on news that a government auction of some $16 billion in 20-year Treasury securities was a bit of a dud, pushing yields on 20s above 5%, triggering a similar move in the more widely watched 10-year note and 30-year bond.
Here’s a slow-motion replay:
With Republicans and President Trump pushing hard on a “big, beautiful bill” that’s all but certain to explode the deficit, some analysts have spotlighted the surge in rates in bonds as a potential problem area for the stock market. The surge in bond yields is also a global phenomenon: Japanese 30-year bond yields are at a record high and UK 30-year bond yields aren’t too far off their highest levels since the late ’90s.
You’ll remember that spiking bond yields seemed to contribute to the general sense of chaos during the tariff-related tumble in the market back in April.
In fact, the market for US government debt was one of the main markets “getting yippy” that prompted Trump to temporarily pause his tariff plan.
