On Wednesday, the U.S. 30-Year Treasury bond (US30Y) (TLT) yield topped 5.31% before settling at 5.3%. The debt market’s response to Treasury Secretary Bessent tripling the purchase of bonds warrants investor concern.
Bond markets settled somewhat after the 10-year Treasury note (US10Y) auction. The Treasury sold $39 billion of notes at a yield of 4.834%. This is a level not seen since 2023. The yield is pricing in Brent crude prices at $100/bbl. The U.S. tariff escalation with Canada (EWC) is also a headwind. Debt markets are pricing in the impact of tariffs raising inflation rates.
The BLS will report the CPI tomorrow at 8:30 a.m. Economists are expecting the CPI to rise.
Energy investors picked up shares of ExxonMobil (XOM), Valero (VLO), EOG Resources (EOG), Chevron (CVX), and BP plc (BP). Household stocks fell, since inflation typically weakens consumer demand. P&G (PG), Kenvue (KVUE), Clorox (CLX), Estee Lauder (EL), and Church & Dwight (CHD) declined.
Investors sold retail stocks including Walmart (WMT), Target (TGT), and Costco (COST).
Watch for TLT ETF to Bottom
Bond yields usually dropped swiftly when tensions between the U.S. and Iran eased. This time, the standstill continued. The uncertainty kept oil prices high, which hurt bond prices.
TLT stock closed at $81.73, compared to a 52-week low of $81.17. The ETF might fall as low as $80.00. At that price, bond investors might buy the ETF to bet on a sharp rebound.
