Give an inch and they'll take a mile. That's how the market reacted when the Treasury said it would buy $6 billion of long-dated Treasuries versus the $4 billion many expected. Instead of gratitude, investors expressed disappointment — the shock and awe proved insufficient. The 10-year Treasury yield jumped to its highest level since 2023, and the S&P 500 fell for a third straight session.

At the same time, Brent crude pierced $101/bbl. The US struck Iranian tankers near the Strait of Hormuz in response to Iranian attacks, while the Houthis continued targeting Saudi oil infrastructure. US President Donald Trump downplays the risks and promises to end the conflict after the midterms, but hostilities show no sign of abating. Tehran says counter-strikes will intensify.

S&P 500 and Treasury yield dynamics

The buyback itself has an ironic twist. US Treasury Secretary Scott Bessent tripled purchases versus the original $4 billion plan in an effort to quench the bond-market "fever." The market took it as a test of resolve and immediately probed for limits. What Bessent will do next is unclear, but the episode raises a deeper puzzle: yields have been rising for some time without triggering a full equity collapse. Even on Wednesday, the S&P 500 recovered most of its intraday losses.

All eyes are now on the 5% mark on the 10-year Treasury. It's closer than at any point in three years and represents a psychological watershed — a round number and the highest level in nearly two decades. Most major bond markets are already near peaks not seen since the global financial crisis. The US had held below 5% since 2023. A sustained break and close above 5% would make much scarier scenarios for the S&P 500 feel far more plausible.

AI remains investors' comfort blanket. Tech firms are chasing effectively unlimited demand, and it's hard to stop this funding cycle with a few basis points of higher yields.

S&P 500 earnings momentum

That loop feeds on itself. Nearly 86% of S&P 500 reporters have beaten earnings estimates, marking the best showing since 2021. Consensus EPS growth forecasts for the year have risen from 24% to 32%. For now, strong earnings are offsetting compressed multiples. The key question remains: what comes first — renewed risk appetite for equities or Friday's inflation data, which could tip the scales ahead of the September 15–16 Fed meeting?

Technically, the daily chart indicates that the S&P 500 has broken out of a wedge to the downside. While the index stays below 7,675, the odds of a correction driven by a 1-2-3 reversal pattern rise. It makes sense to hold positions and, at times, add to previously established short positions.