Sharp moves: Treasury yields shot up yesterday, taking them to 16-year highs

10/3/23 8:00PM

Shooting pains

‍US 10-year treasury yields, a key measure of the interest cost for future government borrowing, have shot up to their highest levels in 16 years. The benchmark yield leaped yesterday, surpassing 4.8%, driven by the latest job report from the US Labor Department. The survey revealed a surge in job openings, raising the expectation that the Federal Reserve will have to maintain an interest rate regime of “higher for longer”.

The move spooked investors, with the S&P 500 Index dropping 1.4% and the tech-heavy NASDAQ shedding nearly **2%.**‍

‍Beg to borrow

‍Apart from hurting your stock portfolio, treasury yields that shoot up and stay up are a big deal for the government’s ability to borrow more debt. Borrowing a few extra billion, or trillion, with a promise to pay it back in 10 years will now come with a 4.8% interest rate for Uncle Sam — while only 3 years ago, the rate was just 0.8%.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.