Stock markets closed essentially flat on Thursday after having recovered from the worst selloff in a month the day before, sparked by investor worries about the U.S.’ fiscal future.
Bond yields spiked earlier in the day before steadying. The yield on the 10-year Treasury hit 4.63% before falling to 4.54%. The yield on the 30-year Treasury surged to 5.15%, its highest level in more than a year, before falling to 5.05%.
The spikes reflect investor worries that the $4.5 trillion package of tax cuts and spending House Republicans passed Wednesday morning would add to the U.S.’ already hefty government debt. T
“[U]nless the bill is watered down by the Senate, there is clearly a risk of yields rising even further,” said John Higgins, chief markets economist at Capital Economics.
Economic data continued to come in mixed. A pair of National Association of Realtors reports indicated that existing home sales for April fell to the lowest level in 15 years, weighed down by still-high housing prices and unaffordable mortgage rates.
However, a government report revealed fewer Americans applied for jobless aid last week than expected, showing the labor market continues to hold steady in a shifting policy environment. And a survey of purchasing managers showed manufacturing activity rose from April to May.
