>> A seismic shift in the US government bond market Thursday, sending Wall Street into a tailspin. The move out of treasuries that started Wednesday, with the biggest sell-off in well over a year was so strong. Some on Wall Street are ready to call the start of a prolonged downward trend known as a bear market.
Interest rates which move in opposite direction of prices soared to their highest in a decade for short-term debt. While the rate on a ten year note used as a benchmark for things like mortgage loans and all types of lending surged to a seven year high. Reuters fixed income correspondent Kate Duguid.
>> We've had a string of great data come in from the US which suggests that the economy on the whole is very healthy. And when the economy is healthy, yields on, especially longer dated bonds. Tens and 30 years increase because investors have a lot more options. Treasury bonds tend to be safe haven investments, and so investors tend to take on risks when the economy is doing well.
>> And that means dumping government debt with the Federal Reserve signaling more rate hikes to come. Some like billionaire investor Howard Marks of Oak Tree Capital Market think bonds have reached a turning point.>> We've known for a long time that interest rates were gonna go up. They've been going up on the short hand for a long time, and the long end's been ignoring that, and now the long end woke up.
I think this is reality, interest rates have been artificially suppressed for ten years. In order to stimulate the economy and pull us out of the financial crisis, and that's over.>> But, sharply, higher rates can threaten corporate profits. Fear of that hit the stock market with the biggest one day slump in months.
Investors are now eyeing Friday's employment report for signs this market upheaval may just be starting.