Treasury Bonds Drop Again Thursday, 10-Year Yield Finishes Above 5%, Thursday, June 07, 2007 3:54:55 PM

A massive sell off in treasury bonds on Thursday sent the benchmark 10-year yield above 5% for the first time since last summer. The selling came on continued worries about inflation and interest rates. The move in fixed income had repercussions across the U.S. markets, with Wall Street plummeting again on fears that the Fed will not be able to cut rates any time soon.

The 10-year yield opened about 7 basis points higher on Thursday, reversing the mild loss that was seen on Wednesday. The treasury sell-off took the 10-year yield above the psychologically significant 5% line for the first time since August 2006. It has flirted with this level over the last few days, following a decline in bonds that has marked the past few weeks. The selling continued into the early afternoon, with the 10-year yield testing the 5.1% mark.

Mild bargain hunting in the afternoon took the benchmark yield off its high for the session. Eventually, the 10-year yield closed Thursday`s session at 5.099%, up 12.9 basis points on the day. The day`s advance was the largest yield in two years.

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