The 10-Year Treasury Yield Surges Past 4.7%, Setting Its Sights on 5%

The 10-year Treasury yield surged past 4.7% on Thursday, its highest level since January 2025, as escalating hostilities in the Middle East fueled inflation fears. Oil prices spiked, with Brent crude futures climbing above $100 per barrel following Houthi rebel attacks on tankers off Saudi Arabia’s Red Sea coast and rising U.S. strike threats. This fresh inflationary pressure comes on top of elevated yields already sustained by fears of expanding federal deficits, as government spending balloons domestically and globally.

“We’ve been in a bond bear market since 2020, 2021, after a 40-year bull market, and the trend in rates and long rates over time is going to be higher,” said Peter Boockvar, investment chief at One Point BFG Wealth Partners. “And I do think the 10-year yield — now that it’s broken above its May high, and is now at its highest level since January 2025 — I think has its sights on retesting 5%.”

A move to 5% would be psychologically significant for the equity market. The last time the key benchmark touched that level was briefly in October 2023, when it hit 5.021%. Before then, it had not exceeded those levels since July 2007, just before the financial crisis. At 5%, the spike in yields could begin cannibalizing demand for equities. Boockvar said he thinks a sustained rise above 5% would be “hugely negative” for the stock market.

In truth, investors cannot say for certain how high yields must rise to significantly damage equities. Even with the 10-year yield topping 4.7% on Thursday, the S&P 500 remains nearly 3% off its all-time high. What may matter more for investors is the underlying driver, according to Steve Englander, global head of G10 FX research at Standard Chartered. A spike in yields driven by a worsening inflation picture could trigger a punishing sell-off in equities, but strong gains in productivity could act as a cap against further upside in bond yields, he said. “Five [percent] will be a shocker when it hits, but what’s driving that 5% is really what matters after the first, you know, three days of headlines,” Englander said. “And if it’s something that’s positive, ultimately the stock market will recover.”

To be sure, the 10-year Treasury yield will still need to close a gap of 0.3 percentage points to reach 5%. But Englander said rapid ascents in Treasury yields have occurred often over the last several years, meaning the bond market is one exogenous shock away from closing the gap. “Those are the forces that you know they never seem likely, but they seem to happen with distressing frequency,” said Englander.

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