Money: Bond-Market Mayhem

Bond traders can be a perverse group. A whiff of economic recovery had Wall Street pushing bond yields skyward (and prices downward) even before last week's report that GDP grew at a surprisingly strong annual rate of 2.4% in the second quarter. Now even stronger growth is widely expected the rest of this year. Since the middle of June, the yield on the benchmark 10-year Treasury bond has surged to nearly 4.5% from 3.1%--a staggering reversal that is shutting down mortgage refinancings and forcing up business borrowing costs. If the trend persists much longer, these higher rates could hold back the...

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