US Treasury Yields Soar to Two-Year Highs Amid Rate Hike Expectations

US Treasury yields have reached their highest levels since January 2025, driven by market expectations for further rate hikes this year. The 10-year yield broke above 4.79% on Monday and Tuesday, putting pressure on growth stock valuations.

JPMorgan's trading team has adjusted its stance on US equities from bullish to 'tactically cautious/neutral' ahead of the Federal Reserve's rate decision on September 16. The team believes that a rate-hike cycle or recession typically marks the end of a bull market, but the probability of a recession over the next few quarters is low.

Fed Chair Kevin Warsh has emphasized the importance of bringing down inflation to the 2% target, and if underlying inflation fails to come down clearly and fast enough, policymakers 'have work to do.' This hawkish stance has weighed on US stock valuations and risk appetite.