Stocks Keep Shrugging Off Rising Treasury Yields Here s the Yield That Could Trigger a Real Selloff

Beads of sweat may be forming on Wall Street as the bond selloff pushes U.S. Treasury yields to multiyear highs, yet equities have so far shown surprising resilience. Equity futures especially in technology were trading lower early Tuesday, but market internals and investor positioning are keeping the broader bull run alive for now.

Strategas Research Partners Jason Trennert and chief market strategist Chris Verrone say the market has room to absorb higher yields before a sustained equity selloff becomes likely. In a podcast with investor Steve Eisman, Verrone argued that money doesnt want to leave the asset class of equities and that the tape is highly rotational: investors are moving within equities rather than exiting them.

One sign of improving internals: the share of S&P 500 stocks trading above their 200-day moving average has climbed from about 50% at the June 2 high to roughly 75% today, Verrone said. That long-term trend-following indicator is commonly viewed as a bullish underpinning, and he argues it shows the markets breadth has actually strengthened during the recent churn even as semiconductors corrected.

Trennert and Verrone pointed to a specific historical reference point for when bond yields have previously rattled stocks: a 10-year Treasury yield around 4.5%. Past corrections in 2023, 2024 and 2025 occurred when the 10-year approached that level. But the Strategas team now thinks the pain threshold for equities may be materially higher than 4.5%.

Verrone noted that in other historical episodes Japan in 1989 and the U.S. during the late-1990s tech boom long-term yields climbed sharply even as equities surged. Japanese 10-year yields rose from 4% to 8% while the Nikkei was melting up, and the U.S. 10-year climbed to about 7% in 1999 as the Nasdaq boomed. Given current nominal U.S. growth (roughly GDP plus inflation near 6.5%), Verrone said the 10-year isnt likely to reach 7%, but the implication is that the level at which bonds start materially competing with equities is higher than many investors assume.

Markets today reflected those competing forces. The 10-year Treasury yield was trading near multiyear highs in the mid4% range (MarketWatch cited figures around 4.69%4.74%), while the 30year yield was hovering above 5.3% levels not seen since 2007. U.S. stock futures were down (S&P 500 and Nasdaq futures slipped), oil was modestly higher and gold and silver pulled back slightly.

Trennert admitted hes nervous about the markets concentration: gains have been driven by a relatively small group of large tech names and hyperscalers benefiting from surging AI demand. That concentration raises vulnerability if the leadership falters or if higher yields begin to compete for capital. He cited Amazon as an example of a company that may struggle to ramp discretionary capex that isnt funded by cash flow without tapping bond and equity markets.

Nearterm economic and geopolitical risks also worry Strategas. Renewed hostilities in the Middle East and uncertainty over the Federal Reserves next moves on rates create a gathering storm scenario that could tip sentiment quickly if yields move sharply higher or risk premia widen. Verrone said the 10years move so far hasnt been explosive enough to dislodge investors from equities but that could change if yields accelerate.

For now, the message is that equities can tolerate a fair amount of upward pressure on yields. But Strategas view is explicit: investors should be prepared for a much worse bond selloff than the market has seen to date before stocks feel sustained pain, and that the critical pivot point for such a shift may be materially higher than the 4.5% reference point used in recent market corrections.

That mix resilient equity internals, concentrated leadership, rising yields and incoming macro and geopolitical data leaves the market in a delicate, rotational state. Investors monitoring risk should watch the pace and acceleration of Treasury yields closely: gradual moves higher may be shrugged off, but a rapid, broad repricing in the long end could finally produce the pullback that many strategists expect if yields reach or convincingly break through a higher, hardertopredict pain level.