Bonds are the current obsession of Wall Street, and rightly so. Treasury yields have soared to levels not seen in years, as the combination of strong economic data, higher oil prices and stubborn inflation has led traders to price in more rate hikes from the Federal Reserve. Take a look at some of the milestones reached just this week: 10-year Treasury note yield : Hit a high of 5.15% on Thursday, a level not seen since 2007. On Wednesday, it surged more than 15 basis points, its biggest one-day pop since April 2025. 30-year bond yield : Reached 5.442%, its highest level since 2004. 2-year note yield : Rose as high as 4.947% on Wednesday, a level last seen 2023. US10Y YTD mountain 10-year yield in 2026 Those sharp moves have taken a toll on stocks. The Nasdaq Composite index sold off by 1% on Wednesday, while the S & P 500 and Dow Jones Industrial Average also struggled. Equities also came under pressure in early Thursday trading. So, what could stem the rally in yields? Longtime investment strategist Ed Yardeni suggested two catalysts. “A relief rally in bond prices would probably require a resolution of the war in the Middle East that would lower oil prices. Another possibility is that U.S. Treasury Secretary Scott Bessent will act to bring bond yields down by buying back more Treasury bonds and issuing more Treasury bills,” the president of Yardeni Research wrote late Wednesday. Indeed, President Donald Trump said Tuesday he believes the U.S. will make a deal with Iran to end the war following the November midterm elections. Meanwhile, the Treasury Department will conduct another bond buyback of $6 billion on Thursday, though the operations so far have failed to impress the bond market, where an average $1.2 trillion in Treasurys change hands each day. Yardeni, however, said that yields on Wednesday rose largely because new data from S & P Global suggest the “U.S. economy is booming.” Put another way, yields rose for a positive reason. But, near term, stocks could remain under pressure if yields stay near their current multiyear highs, or push even higher.
