More swings in the bond market rattled stock markets around the world on Thursday.
On Wall Street, the moves were relatively modest after US bond yields cranked higher but then gave back the gains later in the day. The S&P 500 rose 0.2% and snapped a three-day losing streak.
The Dow Jones Industrial Average added 21 points, or less than 0.1%, and the Nasdaq Composite inched up by less than 0.1%.
Bond yields keep pressure on markets
The moves were more dramatic in Europe, where stock indexes tumbled 1.7% in London, 1.6% in Paris and 1% in Frankfurt. They were hurt by sharp moves for bond yields on that side of the Atlantic. The yield on the 10-year French government bond, for example, shot to nearly 4.95% and then veered toward 4.80% and back up to 4.90%.
That's a punishing swing for the bond market, where moves get measured in hundredths of a percentage point.
High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments.
Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the US economy remains solid and governments' insistence to continue to spend much more money than they bring in.
Those worries don't look to be going away anytime soon, and oil prices climbed again on Thursday to keep the pressure up on inflation. The price for a barrel of Brent crude leaped 4.4% to $US102.31 for its latest yo-yo move on uncertainty about when the war with Iran will allow the global oil industry to return to normal.
Further reports also signalled the US economy is powering through its many challenges. Fewer US workers applied for unemployment benefits last week, which could mean companies are laying off fewer workers.
A separate report on Thursday said growth for US manufacturing also continued in September. Potentially more concerning in that report from the Institute for Supply Management was that increases in prices accelerated, which could mean further pressure on inflation.
It all sent the yield on the 10-year US Treasury toward 5.34% and its highest level since 2002. But the 10-year yield relented later in the day and pulled back to 5.23% from 5.29% late on Wednesday. That helped stocks on Wall Street recover their losses and turn higher.
Still, the 10-year Treasury yield remains much higher than it was last week, when it was below 5%, and from before the war with Iran began, when it was below 4%.
