US Treasury Yields Near Crucial 5% Mark Last Seen During 2008 Global Financial Crisis, But Analyst Dismisses Fears, Says 'Market Appears To Be Overreacting'

As U.S. Treasury yields approach the psychological 5% mark which it last saw briefly in 2023 and during the global financial crisis in 2008, analysts seem less concerned, calling this yield convulsion an overreaction.

What Happened: The U.S. 30-year Treasury yielded 4.95% by the end of the trading session on Friday, however, it touched a high of 5.005% intraday. The 10-year Treasury, on the other hand, yielded an intraday high of 4.790% to settle at 4.762% on Friday.

This upmove in yields followed a strong nonfarm payroll report for December on Friday. The economy added 256,000 jobs in the last month of 2024, much above the economist forecast of 165,000 jobs, the strongest since May 2024.

“It is most likely that the pressure on interest rates is being driven by inflation fears from the soon-to-be-announced tariffs that Trump 2.0 will bring,” said Louis Navellier, the chairman and founder of Navellier & Associates. “The market appears to be overreacting,” he added.

Ed Yardeni and Eric Wallerstein in their note called ‘Bond Vigilantes Spooking Stock Jockey’ said, “If Tuesday’s CPI inflation rate for December is higher than expected, causing the 10-year Treasury bond yield to revisit 2023’s high of 5.00%.”

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Why It Matters: As the stocks struggled after Friday’s reports and bond yields’ reaction, Yardeni and Navellier said that this dip was a buying opportunity.

Navellier said that the market could be additionally reacting to the uncertainty on what the Fed may do. Stocks, however, are taking the higher yields to heart, he added, saying “There’s no reason to panic.” as the pullback on higher rates is likely a “buying opportunity unless earnings disappoint.”

Yardeni also reiterated its forecast of 7,000 points on the S&P 500 by the end of the year. “We still believe that the 10-year Treasury bond yield should trade mostly between 4.25% and 4.75% this year. So we think that the selloffs in the stock and bond markets are buying opportunities.”

Price Action: The Dow Jones Industrial Average closed 1.63% lower at 41,938.45, down approximately 697 points. The S&P 500 Index SPY fell 1.54% to 5,827.04, while the Nasdaq Composite QQQ dipped 1.63% to 19,161.63. Russell 200, on the other hand, fell 2.22% to 2,189.23.

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