Bond yields are climbing again, and stocks are watching closely.

The 10-year Treasury yield finished July at 4.75%, near its highest level since early 2025, according to Treasury market data. The 2-year note ended the month at 4.28%, leaving the gap between the two at 47 basis points — a normal, upward-sloping curve, but one that has steepened as long-term rates push higher. The move at the long end was even sharper: the 30-year Treasury bond climbed above 5.2%, its highest level since 2007 — roughly a 19-year peak.

For equity investors, that matters. When Treasury yields rise, the “risk-free” return on government debt goes up, and future corporate profits are worth less in today’s dollars. Higher yields tend to pressure the most expensive corners of the market first, especially high-growth technology names. Understanding the shape of the yield curve is one of the clearest ways to read what the bond market expects from growth and inflation.

Why yields are rising

The driver is the Federal Reserve — and the fact that it is no longer promising relief.

On July 29, the Federal Open Market Committee voted 9-3 to hold the federal funds rate in a range of 3.50% to 3.75%, a second straight pause. But the split was the story. Three regional presidents — Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari and Dallas’s Lorie Logan — dissented. According to the Fed, they “preferred to raise the target range for the federal funds rate by ¼ percentage point at this meeting.” It was the first time since 2016 that three policymakers dissented in the same hawkish direction.

New Chair Kevin Warsh has stripped forward guidance from the Fed’s statements, leaving markets with less certainty about the next move. “I asked for a good family fight, and I got one,” Warsh told reporters afterward. With inflation still running above the Fed’s 2% target, traders have quietly repriced the odds of a rate italiccut/italic lower — and in some corners, begun pricing the risk of a hike. That repricing is what is pushing yields up.

The jobs report is the next trigger

Friday’s employment data will decide the near-term direction.

The Bureau of Labor Statistics releases the July jobs report on August 7. Economists polled by Reuters expect nonfarm payrolls to rise by 91,000, with the unemployment rate ticking up to 4.3%. The figure carries extra weight after June’s report showed just 57,000 jobs added, roughly half of what forecasters expected.

The math for bonds is unusual right now. A italicstrong/italic jobs number would normally cheer stocks, but with a hawkish Fed on watch, a hot print could push yields higher still and revive bets on tighter policy. A italicweak/italic number would ease rate fears but reignite worries about a slowing labor market. Either way, the 10-year yield is likely to move.

What rising yields mean for stocks

So far, equities have shrugged it off. The S&P 500 closed Friday at 7,489.72, up about 9% for the year, powered by a strong earnings season in which roughly 85% of reporting companies have beaten expectations. The Nasdaq Composite ended at 25,373.85 and the Dow Jones Industrial Average at 52,485.03, its fourth straight monthly gain.

But the higher yields go, the harder that rally is to sustain. A 30-year yield above 5% raises borrowing costs across the economy — mortgages, corporate debt, auto loans — and gives investors a competitive, lower-risk alternative to stocks. If the 10-year pushes decisively above 4.75% this week, the market’s tolerance for richly valued shares will be tested.

What to Watch for the Open

  • Monday: the ISM manufacturing index for July, an early read on factory activity and price pressures.
  • Tuesday: June JOLTS job openings and the June trade balance, plus SpaceX’s first quarterly report as a public company.
  • Friday: the July jobs report at 8:30 a.m. ET — the week’s main event for both bonds and stocks.
  • Levels: watch whether the 10-year yield holds above 4.75% and whether the 30-year stays north of 5.20%. A break higher would put pressure on tech; a pullback would give the rally room to run.

The setup is simple. Stocks are near records, the Fed has gone quiet, and the bond market is doing the talking. Friday’s data will decide who is right.

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