To The Moon

The U.S. 10-year Treasury yield posted its largest single-day gain since the start of 2025 on Wednesday, then climbed on Thursday to its highest level since July 2007.

John Roque of 22V Research found that since 1970, the 10-year Treasury yield has experienced 16 rapid spikes, and every single one triggered a financial crisis.

Roque warned: "We should brace ourselves mentally. Rates are rising, and something in the market is bound to break."

The U.S. 10-year Treasury yield has climbed to levels not seen in years. But for Wall Street, the most worrying factor may not be the absolute level of the yield, but rather the speed of its rise. History teaches us that when rates climb this rapidly, bad things tend to happen.

On Wednesday, the 10-year Treasury yield recorded its largest single-day gain since April 7, 2025; on Thursday it pushed further above 5.17%. Just two weeks ago the yield was still below 4.8%, and in August it even briefly fell below 4.6%, making this surge all the more striking.

John Roque, head of technical analysis at 22V Research, said bluntly in a recent research note: "Something always breaks." Roque examined 10-year Treasury yield charts over the past five decades and identified 16 rapid rate-rise phases similar to the current one. After each such phase, some form of financial disaster erupted.

The severity of the market impact varied across crises: from the sharp but short-lived collapse of Silicon Valley Bank in 2023, to the stock market crash of 1987. But spikes in yields almost always disrupt financial markets and weigh on risk assets.

Number / Date / Crisis Event

1 / October 1974 / Franklin National Bank

2 / February–March 1980 / First Pennsylvania Bank

3 / September 1981 / S&P bear market

4 / July 1982 / Penn Square Bank (and subsequent crisis)

5 / May 1984 / Continental Illinois

6 / September 1987 / 1987 stock market crash

7 / April 1990 / Nikkei crash / savings and loan crisis

8 / November 1994 / Mexican peso crisis / Orange County

9 / August 1996 / Southeast Asian financial crisis

10 / January 2000 / Nasdaq crash / dot-com bubble burst

11 / May 2006 / Housing bubble / subprime crisis

12 / December 2009–March 2010 / Global financial crisis / European debt crisis

13 / December 2013 / Emerging market crisis

14 / October–November 2018 / Balance sheet contraction

15 / 2022 / Nearly all markets under pressure

16 / 2023 / Silicon Valley Bank, Signature Bank and other regional banks

Roque said in an interview: "As certain as night follows day, when the 10-year Treasury yield rises rapidly, something gets crushed. It is always wise to be cautious."

The 10-year Treasury yield is the benchmark for borrowing costs across the entire economy. Mortgage rates and complex hedge fund trades all depend on a relatively stable 10-year yield. Once it spikes rapidly, the high-risk plans of companies and investors betting on stable borrowing costs fall apart.

So where will the crack appear this time? Usually by the time the risk is fully exposed, it is already too late, and the risk point may not appear on the surface to be directly linked to borrowing costs.

The dot-com bust was caused by multiple factors, most notably the inflated valuations of a large number of unprofitable tech companies, but rising rates also played a contributing role. During the housing crisis, rising rates directly exposed the flaws of lax bank lending, and borrowers with floating-rate loans gradually became unable to repay.

Traders currently widely believe that the booming but opaque private credit market, along with the large number of AI data center projects built heavily on debt (some of it off-balance-sheet), are likely to be the trigger points for this cycle.

Keep a close eye on regional banks

Roque believes that regional banks deserve close attention this time; the soundness of regional banks is a necessary condition for the broader market to hold steady. The KRE index, which represents the regional banking sector, has fallen nearly 10% from its recent high, just one step away from entering technical correction territory.

Looking back at past crises triggered by rising rates, the banking sector often suffered the heaviest blows. "Regional banks in particular must remain resilient. Even if they decline, the drop cannot be too large or evolve into a substantive risk," he said. "If regional banks continue to weaken and it spreads to the entire banking sector, the stock market cannot stage a strong rally. Absolutely not."

Analysts also pointed out that utilities and homebuilding sectors are already showing signs of strain. In the past week alone, the S&P utilities sector index fell more than 4%, far outpacing the declines among the 11 S&P sectors.

"It took the bond market quite a while to get the market to accept the reality of persistently rising rates. Because we have long held the ingrained belief that rate hikes are only temporary, but I think this time is different," Roque said. "This is a long-cycle rise in yields, and the bond market is entering a long-term bear market."

He emphasized again: "We must anticipate. Rates are rising, and something in the market is bound to break."

JPMorgan's trading desk published a research note on Thursday advising investors to "pay close attention to bond volatility," noting that compared with the absolute level of yields, bond volatility tends to bring greater downward pressure on stocks.