Bond Vigilantes Put 5% Yield In Crosshairs

The US economy continues to roar. December's ISM purchasing managers survey showed that services activity remains strong. The JOLTS data, albeit a bit stale from November, showed job openings jumped. That aligned with the recent rise in measures of business and consumer confidence. So why did stocks turn lower today? The answer lies with the bond market.

The prices-paid index in the ISM nonmanufacturing PMI jumped from 58.2 in November to 64.4 in December (chart). That was the highest reading since February 2023. That sent the 10- and 30-year Treasury yields to recent highs of 4.69% and 4.92%, respectively.