Analysis: U.S. Treasury yields surge to near 20-year highs, yet U.S. stocks remain resilient against the trend, with AI as a key support.

BlockBeats news, September 27 — Although the U.S. 10-year Treasury yield has climbed to near a 20-year high, U.S. equities have remained resilient, with the S&P 500 Index showing no significant impact. This divergence has prompted investors to re-examine the historical relationship between surging bond yields and stock market performance.

Historical experience shows that rising yields do not necessarily lead to stock market declines. In 1994, Federal Reserve rate hikes triggered a bond market selloff, and the S&P 500 Index briefly fell about 8%, before gradually recovering lost ground as the economy and corporate earnings remained resilient. In 2016, the market viewed rising yields as a signal of economic recovery and policy normalization, and U.S. stocks and Treasury yields rose in tandem. By contrast, in 2022, aggressive Fed rate hikes weighed on both the bond and stock markets, and the S&P 500 Index fell sharply.

In 2026, U.S. equities are likewise facing a combination of rising yields and resilient economic growth. Large-scale investment by technology companies in AI infrastructure is providing support for the economy and the stock market, while a U.S.-Iran agreement that pushes oil prices lower could also ease inflation pressures.

However, the pessimistic view holds that the Fed may need to keep raising rates until the stock market and overall financial conditions are sufficiently restrained. Meghan Swiber, a rates strategist at Bank of America, noted that stocks and other risk assets are currently performing strongly and have not yet sent the Fed a clear signal that demand is slowing.