Notes

US Treasury rates are white-hot. That's bad news for stocks and anyone planning to buy a home.
On Thursday, the yield on the US 30-year Treasury bond hit its highest since 2011 and the 10-year note notched its best return since October 2022. Bond yields go up as bond prices fall.
What's happening: The Federal Reserve has bumped up interest rates by more than 5 percentage points over the past year and a half to fight soaring inflation.
As recently as a few weeks ago, Wall Street seemed almost certain that the Federal Reserve was just about finished with that rate-hike regimen — which many economists had assumed would plunge the US into recession.
But a string of strong economic data has challenged those notions.
The US economy has been resilient: The Atlanta Fed has estimated a whopping 5.8% annualized third-quarter GDP growth rate, unemployment remains low, and consumer spending is strong.
Fed officials are concerned that prices could continue to rise. At their July meeting, they said more interest rate hikes might be necessary soon, according to meeting minutes released this week.
What it means: Higher bond yields could mean bad news for stocks: Bonds compete with stocks for investors' dollars, and when yields go up, equities often go down.
That's because if bond yields are more than stocks, the bonds are generally more attractive. After all, Treasuries are backed by the US government. Stocks are not — and that makes them riskier. (Tech stocks often suffer the most because those companies typically take on a lot of debt to fund their growth, leaving them particularly vulnerable to rising borrowing costs.)
Also, the US dollar tends to benefit when yields rise. When the dollar gets stronger, stocks generally suffer, said Adam Turnquist, chief technical strategist for LPL Financial. A stronger dollar can reduce the value of a company's foreign earnings and make US exports more expensive to consumers abroad, potentially hurting corporate profits and share prices.
For the American consumers who power the US economy, an elevated 10-year Treasury return means more costly car loans, credit card rates and even student debt. It also means more expensive mortgage rates. US mortgage rates this week hit their highest level in 21 years, and home affordability is now at its lowest level in several decades.
How bonds abroad could play a role: But this situation won't be unilaterally resolved by the US central bank.
The EU and UK are dealing with high rates of inflation as well, and their central banks will likely continue to raise interest rates (UK 10-year yields recently reached a 15-year high).
The Bank of Japan also recently announced it would allow the yield on its 10-year bond to increase a bit more.
If international bond yields rise, the demand for US bonds may decrease, meaning the US may have to offer even higher yields to attract investors.
Still, whatever happens abroad, Turnquist said the key to bringing Treasury yields down will be a slower US economy.