The world's biggest bond market extended this month's selloff after solid economic readings and hawkish Fedspeak reinforced speculation that interest rates will remain higher for longer.
Treasurys fell across the U.S. curve — with two-year yields once again near the 5% mark. When asked about the possibility of hiking, Fed Bank of New York President John Williams said that while it is "not" his baseline expectation, it's possible, if warranted.
The S&P 500 dropped for a fifth straight session — its longest losing run since October.
"Most of the data this week show the economy is still firing on all cylinders," said Chris Larkin at E*Trade from Morgan Stanley. "That's going to be a challenge for the Fed's rate-cutting plans."
Treasury 10-year yields rose five basis points to 4.63%. The S&P 500 fell to around 5,010, with its most influential group — technology — leading declines.
Netflix Inc. posted its best start to the year since 2020, attracting more new customers than anyone expected thanks to a strong slate of original programs and a crackdown on password sharing.
In addition to remarks from Fed's Williams, his Atlanta counterpart Raphael Bostic said he's comfortable keeping interest rates steady, reiterating he doesn't think it will be appropriate to lower borrowing costs until toward the end of the year.
"Fedspeak is making us increasingly nervous," said Andrew Brenner at NatAlliance Securities. He added that if the two-year U.S. yield breaks 5%, the next level to watch would be 5.2%.
In economic data, jobless claims remained subdued, consistent with a healthy job market. Separately, the Philadelphia Fed factory index topped estimates. While existing-home sales fell, the pace was roughly in line with the median forecast of economists.
Market-implied expectations for Fed rate cuts — which have collapsed in the past two weeks — declined further this week after Chair Jerome Powell signaled policymakers will wait longer than previously anticipated to ease policy.
