10-Year Yield Hits 5.23%, Highest Since 2007, Stocks Still Rise

The 10-year Treasury yield touched 5.230% intraday Friday, its highest since 2007, yet the Dow still jumped 478 points and capped a winning week.

The yield on the 10-year Treasury note reached 5.230% intraday on Friday, briefly topping Thursday's high of 5.225% before easing back to 5.211% — the highest yield level since June 15, 2007, when it reached 5.247%. The 30-year yield, last seen at 5.488%, reached its highest level since 2004. Despite the bond-market alarm, equities closed higher: the Dow gained 478.64 points, or 0.93%, to 51,828.62, the S&P 500 rose 0.51% to 7,743.41, and the Nasdaq Composite added 0.48% to 27,068.72.

Historically, a bond selloff of this magnitude would drag stocks lower, yet the Dow still capped a winning week, up 0.3%, while the S&P 500 added 1.2% and the Nasdaq rose 2%. Eric Diton, president of The Wealth Alliance, said bearish sentiment has seen a 'sharp' increase from just two weeks earlier but called the market 'incredibly resilient,' with the S&P 500 and Nasdaq roughly 1% below their recent highs. He cautioned that if rates continue to climb, they should have a larger impact on market performance at some point in the future.

According to CNBC, this week's ascent in yields was fueled by hawkish comments from Federal Reserve Governor Michael Barr, persistently high energy prices tied to the Iran war, and a hotter-than-expected purchasing managers' report. Fed funds futures trading suggests a roughly 64% likelihood of a rate hike in October, per the CME FedWatch tool. NBC News reports that mortgage rates hit their highest level in more than two years as the major indexes capped the week in the green, and that diesel prices skyrocketed to an all-time high as the Middle East conflict continued.

Traders are watching for relief on the energy front: CNBC reports that oil prices slid as Iran asked the U.S. to return to the June memorandum of understanding that could reopen the Strait of Hormuz, with West Texas Intermediate crude dropping 2.33% to $92.41 per barrel. CNBC also reports that U.S. Trade Representative Jamieson Greer said 'a lot more details' on U.S.-China negotiations would be released Monday, after Treasury Secretary Scott Bessent said the two countries agreed to extend their trade truce by two months. Higher-for-longer rates remain the key risk, per The Wealth Alliance's Diton.