U.S. Treasury Yields Hit Multi-Decade Highs

U.S. Treasury yields have climbed to multi-decade highs, with the 10-year yield exceeding 5.21% and the 30-year yield surpassing 5.5%. Despite the surge in yields, the S&P 500 has remained resilient, staying within 1.4% of its August 13 intraday record of 7,816.70.

Bank of America analyzed historical data showing that equities typically withstand yields up to 7%. According to the firm, S&P 500 forward price-to-earnings multiples generally remain stable around 16 until the 10-year yield crosses the 7% mark, at which point the median multiple historically drops to 12.1.

Bank of America strategist Meghan Swiber expects rates to continue rising, citing robust growth, higher inflation, and Federal Reserve interest rate expectations. While she forecasts continued upward pressure, her base case does not anticipate the 10-year yield reaching the 7% threshold.