Wall Street was once again rattled. US stock and bond markets both\nplunged in trading on Thursday (20\/8\/2026), even though the US Treasury\nDepartment had deployed a bond buyback strategy to curb the surge in\nborrowing costs.<\/p>\n
Treasury Secretary Scott Bessent\u2019s move to expand buybacks of\ngovernment debt briefly cooled Treasury yields this week. But the effect\nwas short-lived, with the 10-year bond yield climbing back to 4.697%,\nnear its highest level in recent years.<\/p>\n
Citing a report from The Wall Street Journal, LPL Financial Chief\nFixed Income Strategist Lawrence Gillum said the buyback measure is\nnothing more than a temporary solution that does not address the root of\nthe problem.<\/p>\n
Pressure in the bond market spilled over into equities. Retail giant\nWalmart reported its weakest sales growth in six years, reinforcing\nsignals that US consumer purchasing power is beginning to weaken.\nConsumption is the main engine of growth for the US economy.<\/p>\n
Walmart shares tumbled 9.2% and dragged major Wall Street indices\nlower, with the Dow Jones Industrial Average down 1.3%, the Nasdaq\nComposite down 1% and the S&P 500 down 0.9%.<\/p>\n
Tech giants such as Nvidia and SpaceX also came under pressure\nbecause both rely heavily on debt to finance massive expansion of AI\ndata centres.<\/p>\n
A day earlier, on Wednesday (19\/8\/2026), the quantitative trading\nworld was also shaken by its own drama. Biotech stock Moderna soared\n177% after its cancer therapy results were deemed highly promising,\nleaving short sellers who had bet the stock would fall nursing heavy\nlosses.<\/p>\n
Morgan Stanley dubbed the phenomenon the \u201cMRNA squeeze\u201d. According to\nGoldman Sachs, it was the worst day in more than two years for\nsystematic long-short fund managers, with average losses of 1.4% in a\nsingle day, although they were still up 1.7% on a monthly basis.<\/p>\n
Besides Walmart, results from other retail giants such as Target,\nTJX, Home Depot and Lowe\u2019s also painted a mixed picture of the American\nconsumer. Lowe\u2019s CEO Marvin Ellison acknowledged that middle-class\nconsumers remain cautious about spending, and not just because of fuel\nprices.<\/p>\n
Fuel prices are indeed one of the concerns. According to research\nfrom Brown University\u2019s Climate Solutions Lab, Americans are estimated\nto have spent an additional US$88 billion on petrol and diesel\nthroughout 2026 due to energy shocks linked to the Iran war. Crude oil\nprices rose again, with Brent jumping 2.4% to US$93.78 per barrel on\nThursday.<\/p>\n
Even so, not all signals are negative. Data from the Bank of America\nInstitute showed discretionary spending by lower-middle income groups\nactually accelerated in July, while spending by the wealthiest 5% slowed\nslightly after a long climb.<\/p>\n
This \u201cnot too hot, not too cold\u201d economic condition is seen as\nkeeping inflation in check and sustaining stock market optimism\nthroughout the year. Investors have begun to scale back expectations of\na Federal Reserve rate hike in 2026, which has helped boost\nsemiconductor and memory chip maker stocks recently.<\/p>\n
Wilmington Trust Chief Economist Luke Tilley said the US economy is\ncurrently at a balanced point \u2014 strong enough to avoid recession, but\nnot hot enough to trigger higher inflation.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/wall-street-tumbles-us-treasurys-debt-reduction-strategy-fails-completely-1787302314", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }