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The fresh rip in the 10-year US Treasury yield (^TNX) is triggering a brutal memory for many investors.
They aren’t necessarily admitting it, as seen in the stock market’s surprising resilience.
The last time the US 10-year bond yield was this high was July 2007. Three months later, the global financial crisis started as the housing meltdown shocked the world. The Nasdaq Composite (^IXIC) plunged 56% over the next 16 months, the team at Bull Theory pointed out.
Now we aren’t currently living in a global financial meltdown by any means. And to suggest we are on the cusp of a stock market crash simply because yields are back to 2007 levels would be reckless.
But it does bear watching, and perhaps warrants reining in one’s risk appetite for stocks.
The 10-year Treasury yield climbed as high as 5.12% on Wednesday, its highest level since 2007. The 30-year Treasury yield touched 5.37% while the 5-year yield also jumped to a 2007 high.
The move higher in yields comes as oil prices advanced and business activity data came in hotter than expected. Taken together, it fueled concerns about further Fed rate hikes.
Fed members aren’t helping the matter.
New York Federal Reserve president John Williams said Thursday it was reasonable to think the Fed may need to raise interest rates again before year-end to corral inflation.
Williams echoed Federal Reserve governor Michael Barr’s comments on Wednesday that additional interest rate hikes would be needed.
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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