US Treasury Yields Top 5% as Business Activity Hits Five-Year High; Stocks Slide

U.S. Treasury yields surged on Wednesday, with the 10-year note reaching 5.10% — its highest since 2007-08 — after data showed U.S. business activity expanding at its fastest pace in over five years, fueling expectations of another Federal Reserve rate hike next month. Every Treasury note and bond except the two-year traded above 5%, and the two-year sat just 5 basis points below that threshold, raising the prospect that the entire curve could exceed 5% for the first time since 2007. A weak five-year auction drew the lowest demand since 2018. Wall Street fell on higher borrowing costs and oil prices: the Dow dropped 0.7%, the S&P 500 0.8% and the Nasdaq 1.1%. Every S&P sector declined except energy, which rose 1%. The dollar jumped 0.5% to a near two-month high, Brent crude gained 4% and gold fell 1.5%.