To The Moon

The latest Fed minutes sent a mixed message.

All 19 policymakers backed September’s 25bp rate hike, taking the federal-funds rate to 3.75%–4.00%. Most officials still think another hike will probably be appropriate before the end of 2026 — but they left the timing open. 

Meanwhile, something else is happening that could matter even more for stocks.

Long-term Treasury yields are surging.

The 10-year yield touched around 5.36% and the 30-year reached roughly 5.73% on Wednesday — both their highest levels since 2002. 

So here’s the question:

What if the Fed eventually stops hiking, but long-term yields keep climbing?

That’s possible because the Fed doesn’t directly control the entire Treasury curve.

Long-term yields reflect a combination of:

🔹 Inflation expectations

🔹 Economic growth

🔹 Treasury debt issuance and investor demand

🔹 The term premium

🔹 Expectations for future Fed policy

And right now, several of those forces are pushing yields higher.

Why should stock investors care?

A 5%+ 10-year Treasury changes the competition for investors’ money.

If investors can earn a relatively attractive yield from government bonds, stocks — particularly expensive growth stocks — need stronger earnings to justify their valuations.

Higher long-term yields also increase borrowing costs for businesses and consumers.

But there’s an important counterargument.

If yields are rising because the economy remains strong, corporate earnings could continue to support equities.

That’s why this isn’t simply a bull vs bear story.

The bigger issue is whether the economy can stay strong enough to support earnings while borrowing costs remain elevated.

The Fed may eventually pause.

But the bond market doesn’t have to pause with it.

That’s the risk I’m watching.