Treasury Yield Rises Above 5% as Stocks Near Records
U.S. stocks are near record highs, but three charts show an interesting setup: the 10-year Treasury yield has risen above 5%, September's gains remain concentrated in the Magnificent Seven, and oil prices are approaching $100 a barrel.
The weekend added uncertainty after President Trump reportedly rejected Iran's proposal to reopen the Strait of Hormuz, while negotiations with Tehran are expected to resume this week. The 10-year Treasury yield rose to 5.205% early Monday, its highest level since 2007 and the 2008 financial crisis.
The Federal Reserve raised its benchmark interest rate by 25 basis points earlier this month to a range of 3.75% to 4.00%, with 16 of 18 Fed officials projecting at least one more rate increase this year. Macquarie's Thierry Wizman said heavy government and corporate bond issuance, including borrowing tied to AI investment, has become a larger driver of yields this year than inflation.
September's S&P 500 gain has been driven largely by the Magnificent Seven, while ex-Mag 7 large caps and small caps have lagged. The week ahead brings a dense run of economic data and earnings, including the PCE inflation report, jobs data, and Micron's earnings.