Rates are on the move.

On Monday, the yield on the US 10-Year Treasury hit 4.7%. That’s the highest level since early 2025.

And there’s good reason to think yields are headed even higher. 

The chart below shows the US 10-Year yield. It's breaking out of a wedge pattern that it’s been building since December 2023. 

Big breakouts like this tend to ignite powerful moves higher. So, don’t be surprised if rates head even higher from here. 

The long end of “the curve” is moving even more aggressively. The chart below shows the yield of the US 30-year Treasury. It’s broken out to 5.3%. That’s the highest level since 2007. 

These are what we call “benchmark” interest rates. They influence everything from mortgages to credit card rates.

When they climb higher, life gets more expensive for American consumers and businesses. That’s why rising Treasury yields are usually a headwind for stocks. 

So far, the recent uptick in rates has yet to derail the stock market. The S&P 500, for one, is trading near all-time highs. 

But stocks might not be so resilient if this continues. 

You see, volatility has been muted lately. In fact, the Volatility Index (VIX) is trading at its lowest level since the start of the year. This could suggest complacency. 

I also wouldn’t be surprised to see some sort of uptick in volatility, especially with the midterms approaching. 

As I explained last week, rising energy prices (namely oil) can cause inflation to ratchet higher, and that can eventually lead to higher interest rates. 

Stocks have handled the rise in rates well so far. But if yields keep climbing, you’ll want to get more disciplined and selective with your trades.

Justin Spittler

Director of Trading, RiskHedge