The bond market's 2007 moment is here to throw a wrench into everyone's plans
NEWS | 20 May 2026
When comparisons to the Great Financial Crisis era start popping up in markets, you know the investing landscape is on shaky footing. Loading audio narration... The latest example came on Tuesday, when the 30-year US Treasury yield jumped to its loftiest level since 2007. (Its 10-year counterpart, meanwhile, was at the highest since January 2025.) The Iran war, which erupted in late February, has been the most recent catalyst driving yields higher. The conflict sent oil prices soaring well above $100 per barrel, stoking fears of inflation that's already started showing up in economic data. This is important to everyday people because higher yields manifest themselves in many ways. They push mortgage rates higher, making it more expensive to buy a house. Car loans get pricier. Interest rates for credit card debt and student loans rise. You get the picture. Yields are moving higher because investors are increasingly expecting the Federal Reserve to address higher inflation by hiking interest rates — a shift that's already happening. In the past couple of weeks, the odds of a rate increase by year-end have risen to about 60%. That then weighs on stocks. Major US indexes have dropped for three straight days as yields have spiked globally. Investors seem to be coming around to the idea that lending conditions will get tighter. With all of that established, let's unpack two key considerations going forward: 1. The path higher for stocks is getting cloudier Don't take it from me. Take it from Mike Wilson, one of Wall Street's staunchest long-term stock supporters. Despite his continued long-term bullishness, he said this week — on the heels of a sharp sell-off last Friday — that equities could see a short-term correction because of spiking bond yields. Bank of America's investment strategy team took a different path to a similar conclusion. For the week ended May 14 (the day before the stock market's ongoing skid), it surveyed 200 fund managers with a combined $517 billion in assets. Those investors are the most overweight stocks since January 2022. Sounds great, right? Not quite. BofA says the jump in bullishness now has an indicator it follows on the brink of flashing a contrarian sell signal. As a result, the firm says it expects profit-taking as soon as June. 2. Trump's affordability agenda is being challenged Earlier in the president's second term, he was ultra-sensitive to spikes in Treasury yields, even more so than dips in stocks. The Iran war has proven to be a different beast — a policy decision that can't be as easily unwound as a tariff announcement. Hence the climb to multiyear highs. The impact can be felt all around. US consumer prices just rose the most in years. Mortgage rates are the highest since last July. Gas prices at the pump are near the highest since 2022. The list goes on. It's not an ideal combination of forces for Trump ahead of midterm-election season.
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