Also in Weekend Reads: Helping retirees get over their fear of spending, prenups, Walmart's big move, and advice from the Moneyist
Tumbling bond prices mean rising yields that can cause the stock market to decline as investors move their money.
Investors have continued to sell long-dated U.S. Treasury securities as they anticipate a move by the Federal Reserve to raise short-term interest rates to quell stubborn inflation. As bond prices fall, their yields increase. That has implications for government policy because of rising interest payments, and for the stock market.
Fear of rising interest rates is part of the "negative risk trinity" of threats to the stock market that Charlie McElligott, a strategist at Nomura, discussed with Joseph Adinolfi.
The yield on 10-year U.S. Treasury notes BX:TMUBMUSD10Y had risen to 4.96% early Friday from 4.47% at the end of June and 4.17% at the end of 2025.
Joy Wiltermuth explained how the market reacted negatively to the Treasury Department's bond auction and redemption activities following strong words about government intervention by Treasury Secretary Scott Bessent.
Latest: Hotter-than-expected 'core' inflation boosts chances of Fed rate hike - live updates
Where there is pain, there is also opportunity
The Bloomberg Municipal Bond Index's yield was 4.98% as of the close on Sept. 10. These bonds pay interest that is exempt from federal income taxes. Meanwhile, the yield on 20-year U.S. Treasury bonds, which pay interest exempt from state and local income taxes, was 5.40%.
While declining bond prices mean declining brokerage-account balances and threats to the stock market because bond yields are becoming more attractive, the other side of the trade is looking good for income-seeking investors.
For a long-dated example of how high yields have gotten, the chart above shows that the Bloomberg Municipal Bond Index's yield has increased to 4.98%. This is an investment-grade index of bonds paying interest that is exempt from federal income taxes. A market with 5% investment-grade tax-exempt yields "traditionally does not last," according to Dan Close, Nuveen's chief investment officer and the head of the firm's municipal fixed-income team, who was interviewed by MarketWatch.
The yield on 20-year U.S. Treasury bonds BX:TMUBMUSD20Y is about 5.40%, and these bonds pay interest that is exempt from state and local income taxes, but still subject to federal income taxes.
Here is how you can compare the yields of corporate bonds, municipal bonds and Treasury bonds if you want to factor in your particular tax situation when selecting investments for income.
Setting up retirement income to get over the fear of spending
Beth Pinsker writes the Fix My Portfolio column. This week she interviewed Jean Chatzky, who cited retirees' fear of spending as one reason she wrote her new book, "The Forever Paycheck." Chatzky recommends a varied strategy for retired investors to set up streams of income and feel better about spending money to have fun.
More from Beth Pinsker: I'm locked into a 10-year annuity and now I'm strapped for cash. What are my options?
A prenuptial agreement might serve you and your partner well
Don't Short Yourself - MarketWatch's new weekly newsletter - offers smart tips to help you earn and grow your money.
You might think that prenuptial agreements are only necessary if one or both people are coming into a marriage with a lot of assets. And you might find the idea of a prenuptial agreement to be cynical, because it covers the end of marriage that hasn't even started.
But in this week's Don't Short Yourself newsletter, Genna Contino explains why prenuptial agreements have become popular among young adults, and why she has decided to enter one before she gets married in 2028.
News about companies
Bill Peters covered Walmart (WMT) with a forward-looking story about how the retail giant can expand upon its lucrative investments in advertising and media.
Apple (AAPL) announced a slew of new products, including its expensive dual-screen iPhone. Here's how wireless service providers plan to help people pay for the iPhone Duo.
More from the MarketWatch Companies team:
-- Anthropic's safety-first image takes a hit ahead of its massive IPO: 'AI could kill all humans'
-- Meta is winning over Wall Street with its new Muse AI agent
What to stream and which services to pay for
Mike Murphy's September guide to streaming services' offerings includes a lot of information about new or returning shows, and which streaming services are worth paying for.
A different stock market
Poland's economy has doubled in size since the country joined the European Union in 2004. And now, S&P Dow Jones Indices has reclassified Poland as a developed economy. Here is a look at Poland's stock market, including an exchange-traded fund for U.S. investors that has performed remarkably well, and including three stock picks.
More on stocks:
-- Here are the stocks to favor in the fourth quarter - and those you should avoid
-- A contrarian case for stock-market gains through the midterm election
-- The investment lessons from the Vanguard 500 Index fund's 50-year history
The Moneyist and "a yearslong headache in the making"
Quentin Fottrell is the Moneyist.
This week Quentin Fottrell - The Moneyist - answered questions from a woman who owns a nice piece of property on which she lives, with one of her two sons about to have a house built on the same property. Here is Fottrell's warning about how this can create a serious problem affecting her estate planning.
More from the Moneyist:
-- 'We fear financial exploitation': Who will manage our finances if my wife and I become incapacitated?
-- My 87-year-old mother wants to pay for my brother's kids' education. I don't have children. How is that fair?
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-Philip van Doorn
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