September 23, 2026, was a very, very rough day for Treasurys. So rough, in fact, I suspect mechanical flows and forced selling were in play. (I know, I know: “Do you think so?“)

The march higher for US yields began promptly at 9:45 AM ET, which is to say the initial trigger was the release of preliminary September PMI data from S&P Global. All three of the headline readouts (i.e., manufacturing, services and the composite gauge) were scorching hot.

Around the same time, the Fed released the prepared text of a speech from Michael Barr, who spoke at an event in Chicago. In his remarks, Barr said additional rate hikes are likely necessary to curb inflation.

By 10:30 in New York, 10-year yields were flirting with 5.07%. Had it stopped there, this wouldn’t really be a story. But it didn’t. Didn’t stop there, I mean.

Instead, the situation escalated, with benchmark US yields peaking near 5.14%, 10bps above the September 15 intraday high. Wednesday’s inflection was sharp enough to stick out as a vertical ascent on a chart (orange diamond marker, below).

The annotations on the figure will elicit some chuckles. Suffice to say Scott Bessent should’ve known better.

Since Bessent intervened in August to cap borrowing costs (there was no evidence of market dislocation that would’ve justified upsizing buybacks), 10-year yields are 50bps higher. Let that be a lesson: Don’t try the bond market unless you’re the central bank. Even if you are the central bank, success in a battle with bond vigilantes isn’t guaranteed. Ask the RBA about that.

(As a quick aside, while re-reading my coverage of Australia’s YCC abandonment this afternoon, it occurred to me that my own views on central bank omnipotence have shifted over the past four years, and by quite a bit more than I realized.)

Note that the selloff at the US front-end pushed twos more than 100bps wide to EFFR. Again.

As the figure shows, Wednesday’s fireworks effectively erased all the progress the Fed made this month in bringing policy rates closer to where the front-end thinks they “should”/will be.

STIRS put the chances of a hike next month at roughly 70%, up from a coin flip on Tuesday. That’s a serious escalation. If Kevin Warsh isn’t sweating right now, he should be. Back-to-back hikes before the mid-terms is the sort of thing that gets Bill Pulte interested in your mortgage docs. I’d say I’m joking, but… well, you know what I mean.

Insult to injury on Wednesday: Bessent’s five-year sale tailed 3bps despite a dramatic, belly-led cheapening into the auction.

As the figure shows, dealers were left with almost 16% of the sale, the most in years. The indirect award, 54.3%, was more than 10ppt below average.

It’s a small miracle stocks held up as well as they did. Wednesday was one of the worst all around sessions I can remember for Treasurys, and the correlation between rates and equities is (unfortunately) positive these days.

Bottom line: This was a mini-meltdown in rates, and while I doubt Trump’s attuned enough to notice on his own, if it comes across his radar, Bessent will have some ‘splainin’ to do.