The Week Washington Fought the Bond Market

For one week, the bond market was the only market that mattered. Long-dated Treasury yields tore to multi-decade highs, the national debt crossed $40 trillion, and the Treasury launched an intervention to stop the rout — which held for about a day before yields climbed right back. Stocks were passengers the whole way. Friday's bounce, led by health care and crypto, dressed up a week the S&P still finished lower, snapping a three-week winning streak.

The S&P fell about 1.4% on the week, from 7,785.76 to 7,674.37 — its first weekly loss in four. Friday itself was green: the index rose 0.43%, and the Dow jumped 518 points, or 1%, powered by health-care names after Merck and Moderna reported a successful late-stage mRNA trial. Crypto-linked stocks surged as bitcoin capped a 22% week — Robinhood rose nearly 14%, Coinbase 8%.

The three days that defined the week

In between, Tuesday brought the worst of it: the 30-year yield hit roughly 5.33%, its highest since 2002, as Brent crude pushed back above $90 on renewed Iran tensions. Thursday undid Wednesday's relief entirely, with yields climbing back above their pre-intervention levels as the market judged a $4 billion buyback program too small to fix a structural problem.

The Treasury spent real credibility to buy the long bond one good day. By Thursday the market had handed it back. That exchange rate should worry Washington.The Friday Recap

What to watch next week

Everything now points to Wyoming. Kevin Warsh delivers his first keynote as Fed chair at the Jackson Hole symposium next Friday, and with inflation sticky, the labor market softening and the long end in revolt, it may be the most consequential central-bank speech of the year. The market will be listening for one thing above all: whether Warsh is still leaning toward raising rates.