Rising US Treasury yields trigger broad stock sell-off and revive Fed rate fears

Stock futures were flat on Wednesday after a spike in Treasury yields during U.S. trading raised concerns about additional Federal Reserve rate increases.

Treasury yields spike

Officials said market participants pointed to renewed concern that tighter financial conditions could push policymakers toward a longer period of restrictive policy. The move followed a run of stronger-than-expected prints and comments cited by traders as increasing the odds of higher-for-longer rates, officials added.

Traders assessed risk pricing in short-term funding markets and adjusted positions in corporate credit and long-duration assets. Officials said dealer inventories tightened, amplifying price moves in both Treasuries and equities.

Investors will watch incoming U.S. economic releases and any Fed remarks over the next 24 hours for clues on policy timing and the durability of the sell-off.

Officials said the jump in Treasury yields preceded broad selling in benchmark equity averages during regular trading, with investors trimming positions sensitive to higher rates. Data showed volatility picked up as fixed-income benchmarks moved higher, prompting margin-driven and discretionary selling across rate-sensitive sectors.