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Treasuries Roiled by Powell’s Tone as Stocks Slip: Markets Wrap

  • Fed chair signals central bank is ready for aggressive hikes
  • WTI above $110 a barrel keeps market on high inflation alert
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Equities Are the Place to Be: Defiance's JablonskiSource: Bloomberg
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Jerome Powell’s renewed hawkish message roiled financial markets, sending Treasury yields spiking higher as the Federal Reserve looks poised to raise interest rates sharply to tamp down inflation.

The two-year Treasury rate surged almost 20 points to its highest level since 2019, while the three-year and 10-year yields jumped by the most since March 2020 after the Fed chair said the central bank will take the “necessary steps” to get price increases under control. Stocks initially sold off as the chairman spoke, but almost erased all losses with a late-session rebound. The ructions in the Treasury market narrowed the rate spread among maturities, in a sign that the bond market is anticipating the Fed’s restrictive moves could tip the economy into recession.