{"id":864921,"date":"2026-09-29T17:06:09","date_gmt":"2026-09-29T17:06:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/864921\/"},"modified":"2026-09-29T17:06:09","modified_gmt":"2026-09-29T17:06:09","slug":"bond-market-sell-off-why-investors-shouldnt-panic-about-the-spike-in-yields","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/864921\/","title":{"rendered":"Bond Market Sell-Off: Why Investors Shouldn’t Panic About the Spike in Yields"},"content":{"rendered":"

Try not to lose any more sleep over the latest bond market freakout<\/a>. <\/p>\n

While, there’s growing anxiety in markets that rising yields are about to cause something to break, some forecasters are urging calm, telling investors that the economy can handle it. <\/p>\n

The sell-off in US Treasurys<\/a> has sent key US bond yields to 20-year peaks. The yield on the 10-year Treasury<\/a> recently surged to its highest level since the Great Financial Crisis, while the yield on the 30-year bond<\/a> rose past 5.5% the highest since 2004. <\/p>\n

Historically, higher yields have signaled tighter financial conditions and increased pressure on stock prices, with 5% being the critical threshold<\/a> that suggests risk assets like stocks are in the “danger zone.”<\/p>\n

But the sell-off may not be the sign of a coming calamity that some investors are fearing, as the recent spike in yields is largely reflective of one thing: That the US economy<\/a> is strong enough to withstand higher rates.<\/p>\n

The bond market’s logic goes something like this:<\/p>\n

If the US economy were weak, investors would expect the Fed to lower interest rates to support growth, which would lead yields to fall.But recent economic data has been strong, a factor that has helped send yields higher. The surge in yields last week was partly influenced by robust growth, with economic activity expanding at its fastest pace in over five years, according to the latest S&P Global Flash PMI<\/a>. <\/p>\n

Manufacturing activity was also strong, with the index’s gauge for the sector coming in at a 52-month high.<\/p>\n

Strong manufacturing and services growth is likely what sent “yields to the nosebleeds,” Jose Torres, a senior economist at Interactive Brokers, wrote in a recent client note.<\/p>\n

The Fed is expected to hike rates several more times to tame inflation. Markets are pricing in a 95% chance that rates will end the year higher than where they are now, according to the CME FedWatch tool.But long-term inflation expectations remained anchored at around 2% to 3%. That suggests bond yields are rising largely due to the surge in real yields, rather than investors panicking about runaway inflation.<\/p>\n

“What’s really driven us here is 1), Federal Reserve rate expectations<\/a>, and 2), higher nominal growth. We have very solid nominal US growth,” Rob Haworth, a senior investment strategist at US Bank Asset Management Group, told Business Insider.<\/p>\n

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“What’s happened is the Fed has said, ‘My goodness, growth is so robust,'” he added, pointing to comments from the central bank that it had room to raise rates further to get a handle on inflation.<\/p>\n

Haworth said he’s not concerned about yields well above 5%, as it is a less meaningful psychological threshold for investors than it was in the past due to the rise in real yields, he said.<\/p>\n

Investors have been selling bonds because they’re reassessing growth and Fed rate expectations, rather than due to concerns about inflation or the US’s fiscal sustainability, Seema Shah, the chief global strategist at Principal Asset Management, wrote in a note.<\/p>\n

“With growth remaining robust, it is hardly surprising that Treasury yields<\/a> have moved higher. While rising yields may create headwinds, they are also a reflection of stronger growth,” Shah said on Monday.<\/p>\n

Another reason not to panic: the stock market has been mostly unfazed. Major stock averages remain close record highs, fueled by expectations for continued earnings growth and economic strength. <\/p>\n

“We have written before that there is one superglue holding the market together this year: growth. There is simply no other way of explaining the huge rise in yields (almost exclusively driven by neutral rates), equities close to record highs,” George Saravelos, global head of FX research at Deutsche Bank, wrote last week. <\/p>\n

Some investors have been concerned that higher yields could compete for capital<\/a>, drawing investors away from stocks. But short-term yields aren’t competitive with stocks yet, DataTrek Research said on Tuesday.<\/p>\n

Given the risk associated with owning stocks, short-term Treasurys will likely remain uncompetitive until yields surpass the 5.5%-6.5% range, Nicholas Colas, the co-founder of DataTrek, estimated.<\/p>\n

Forecasters think that yields could rise further as markets continue to reprice expectations for Fed rate increases. Should the US economy and investment demand remain resilient, there’s “scope for yields to move higher,” Shah said. <\/p>\n

US Bank’s Haworth said he would watch whether 10-year inflation expectations moved toward 3% to discern whether markets were in distress. Otherwise, he said he wouldn’t necessarily be worried about the 10-year yield reaching 5.5% or even 6%.<\/p>\n","protected":false},"excerpt":{"rendered":"Try not to lose any more sleep over the latest bond market freakout. While, there’s growing anxiety in…\n","protected":false},"author":2,"featured_media":864922,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[18280,28,364988,364989,101,26968,15207,2402,2995,3747,112,1478,364987,329704,103429,25,18391],"class_list":["post-864921","post","type-post","status-publish","format-standard","has-post-thumbnail","category-markets","tag-bond-market","tag-business","tag-close-record-high","tag-datatrek-research","tag-economy","tag-expectation","tag-growth","tag-inflation","tag-investor","tag-market","tag-markets","tag-rise","tag-rob-haworth","tag-seema-shah","tag-stock-price","tag-us","tag-yield"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/864921","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=864921"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/864921\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/864922"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=864921"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=864921"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=864921"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}