Stories
When Will Rising Yields Hit Stocks? History Points to 7% for 10-Year Treasury
C
CNBC TV18•29-09-2026, 06:31
When Will Rising Yields Hit Stocks? History Points to 7% for 10-Year Treasury
- •Rising U.S. Treasury yields are unnerving investors, who fear the impact on stock market performance.
- •Higher bond yields can pressure equities by offering better risk-free returns and lowering future profit valuations, especially for growth companies.
- •Despite multi-decade high yields (10-year above 5.21%, 30-year above 5.5%), the S&P 500 remains resilient, only 1.4% below its intraday record.
- •Bank of America data suggests the 10-year yield needs to approach 7% to significantly hurt stocks, based on historical S&P 500 price-to-earnings multiples.
- •BofA strategists anticipate continued pressure on the bond market due to expectations of higher Federal Reserve interest rates, robust growth, and inflation, but do not foresee the 10-year yield reaching 7% in their base case.
Key Questions Answered
Data compiled by Bank of America suggests that the 10-year yield will have to approach 7% to meaningfully hurt stocks, as S&P 500 forward price-to-earnings multiples drop once yields go above that level.
Higher bond yields pressure equities because investors can secure a higher rate of return from bonds without taking on equity market risk, and they lower the future profits of companies when calculated in today's dollars.
The 10-year Treasury yield last closed with a 7-handle on July 8, 1996, when it reached 7.06%.
