US Treasury 10Y Yield Jumps 12 Bps on DOJ Turnover News
3h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
treasury-yieldspolitical-risk
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The benchmark US Treasury 10-year note yield rose 12 basis points to 4.43% on 29 May 2026. The sharp intraday selloff followed news that President Donald Trump fired White House Counsel Pam Bondi. Bondi was terminated due to dissatisfaction with her handling of Department of Justice files concerning the late financier and sex offender Jeffrey Epstein. A CNBC report on the dismissal triggered immediate volatility in government bond futures markets.
The dismissal connects directly to market concerns over the potential for renewed political scandals and their fiscal implications. The last comparable spike in political-risk premiums for US sovereign debt occurred on 9 August 2025, when yields rose 18 bps following a contentious congressional hearing on federal budget authority. The current macro backdrop features the 10-year yield consolidating near 4.30% after the Federal Reserve signaled a data-dependent pause at its May meeting. The immediate catalyst was the market's assessment that this personnel action signals heightened executive branch instability. Investors linked the sudden DOJ-related dismissal to risks of unpredictable policy shifts or institutional friction that could complicate future Treasury issuance and fiscal management.
The yield on the 2-year Treasury note increased 8 basis points to 4.62%, flattening the 2s10s curve to 19 bps from 23 bps at the prior day's close. The ICE BofA MOVE Index, measuring Treasury option volatility, spiked 1.52 points to 112.48, its highest level in three weeks. Trading volume in the front-month 10-year Treasury futures contract (ZNM6) hit 1.8 million contracts, 35% above its 20-day average. The selloff pushed the 10-year real yield, adjusted for inflation expectations, to 1.98%, a 10-basis-point increase. The move in the 10-year nominal yield outpaced the S&P 500's reaction, with the equity index declining just 0.3% on the session.
| Metric | Pre-News (28 May Close) | Post-News (29 May Intraday High) | Change |
|---|---|---|---|
| 10Y Nominal Yield | 4.31% | 4.43% | +12 bps |
| 10Y Real Yield | 1.88% | 1.98% | +10 bps |
| 2s10s Curve | 23 bps | 19 bps | -4 bps |
| MOVE Index | 110.96 | 112.48 | +1.52 pts |
The volatility surge contrasts with a relatively muted reaction in European sovereigns, where the German 10-year bund yield rose only 4 basis points to 2.51%.
The primary second-order effect is a repricing of duration risk across fixed income portfolios. Exchange-traded funds with long-duration Treasury exposure, such as TLT, underperformed, with the iShares 20+ Year Treasury Bond ETF dropping 1.8% on the session. Financial sector stocks with large fixed-income trading desks, including Goldman Sachs (GS) and Morgan Stanley (MS), saw modest gains of 0.7% and 0.5% respectively, benefiting from increased trading revenue prospects. The counter-argument is that this is a transient volatility event driven by headline sentiment rather than a fundamental shift in credit quality, given the US dollar's global reserve currency status. Flow data indicates macro hedge funds initiated short positions in Treasury futures while real-money accounts sold intermediate-duration corporate bonds to manage portfolio duration.
The next key catalyst is the May Nonfarm Payrolls report scheduled for release on 6 June 2026, which will test the Fed's data-dependent stance. Bond traders will monitor Congressional testimony from the acting Attorney General, currently slated for 10 June, for any further signals regarding DOJ stability or policy direction. A break above the 4.45% yield level for the 10-year note would target the April high of 4.52%, while support now firms at the 4.35% level, representing the 50-day moving average. Should the political narrative stabilize without further escalation, the yield move could partially reverse as the focus returns to economic fundamentals like inflation and growth data from sources like Fazen Markets.
Mortgage rates, particularly for 30-year fixed loans, are closely tied to the 10-year Treasury yield. A sustained 12-basis-point increase typically translates to a 10-to-15-basis-point rise in quoted mortgage rates within one to two weeks. This increases borrowing costs for prospective homebuyers and can dampen demand in the housing sector, impacting homebuilder stocks and real estate investment trusts (REITs).
Political risk introduces uncertainty about future fiscal policy, including government spending, tax legislation, and debt issuance plans. This uncertainty causes investors to demand a higher yield, or risk premium, to hold longer-dated bonds, which pushes prices down. The US Treasury market has historically shown acute sensitivity to events threatening government dysfunction, such as debt ceiling debates or high-profile investigations.
The ICE BofA MOVE Index is a direct fixed-income analog to the VIX for equities, measuring implied volatility from Treasury options. A spike above 110, as seen on 29 May, confirms that professional traders are pricing in heightened uncertainty and paying more for protection against future price swings. It is considered a reliable real-time indicator of stress in the interest rate derivatives market.
The bond market is charging a higher premium for US political instability, pressuring long-duration assets.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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