Markets split the week with a cautious sense of optimism but climbed higher. Is the yield curve starting to come back in focus?
Monday
S&P 500 0.07% | NASDAQ 0.51%
Major indexes came under pressure early in the week as the 10-year-treasury climbed to 4.61%. Energy climbed in a renewed spike in oil prices. Value stocks outperformed on the day as tech sold off through the end of trading.
Tuesday
S&P 500 0.67% | NASDAQ 0.84%
The 10-year-treasury was in focus again or Tuesday as 30-year mortgage rates were directly impacted. The CME Group has now shifted from forecasting a rate cut to a possible rate-hike by Q1 2027. A prolonged conflict in Iran has markets pricing in persistent inflation concerns.
Wednesday
S&P 500 1.08%| NASDAQ 1.54%
Yields retreated mid-week as attention shifted to semiconductor announcements with anticipation of a positive outlook for earnings. The MBA 30-year Mortgage Rate jumped to 6.56% following yesterday’s spike in the 10-year-treasury. In a divergence from the norm, oil prices fell on the day driven by hopes of a resolution in Iran.
Thursday
S&P 500 0.17% | NASDAQ 0.09%
Markets found a stable footing as oil prices retreated and yields fell from their high earlier in the week. The Dow Jones climbed to a record high in a bid for value. The Alanta Fed GDP Now forecast raised their projected for the 2nd quarter to a robust 4.3%.
Friday
S&P 500 0.37% | NASDAQ 0.19%
Equities led the way in the final day of this week’s trading as treasury yields came back down. Sectors behaved more defensively as utilities and healthcare outperformed. Pressure from higher borrowing yields dissipated as the week ended.
Conclusion
S&P 500 0.88% | NASDAQ 0.45%
This week focused on treasury yields which showed growth stocks attempting to anchor themselves in a period of higher rates. The yield curve has come back into view as markets decide what inflation is going to look like moving forward. The curve remains normal but there have been recent changes in the long end of the curve(higher). A normal yield curve helps markets decide where to place capital relative to market risk. Markets have avoided a meaningful pullback since the shift in tariff policy in the Spring of 2025. Two potential short-term outcomes could play out. A hawkish shift has unfolded in recent weeks and could signal slowing in the near term. Conversely, markets could be pricing in higher long-term borrowing costs as sentiment fuels growth.
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