When Rates Go Up, Must Stocks Go Down?

Stocks Can Still Perform Well if Treasury Yields Hit 5%

Hello Friends!

I don't know about you, but lately all I seem to be hearing about from the financial talking heads is "These are the highest rates on the 10-year since 2007!" Then it's "Due to stubbornly sticky inflation, what are the odds on the Fed raising rates at its next meeting?" And of course, the doomsday questions follow: What will this mean for stocks, and will it cause a market crash? Will investors shift their money out of stocks and into bonds because of the perceived safety and lock into high bond yields?

With that in mind, I came across this piece from Hartford Funds that I found interesting and wanted to share with all of you.

From Hartford Funds:

5% yields are an important mental threshold for investors but may not be as negative for stocks as you may think.

The 10-year Treasury hasn’t consistently yielded more than 5% since 2007—just before the Global Financial Crisis. If the yield on Treasuries hits that threshold again, investors may be concerned that stocks will underperform.

But while bonds may look especially attractive when they offer higher yields, history shows that stocks can still generate strong returns even when bond yields are high. In fact, since 1991, both stocks and bonds performed better when 10-year Treasuries yielded 5% than they did when Treasuries yielded 4.5%.

If you're one of the many people who have been repeatedly and relentlessly bombarded with negative financial press on rising bond yields and what it may spell for the market in general, I hope this piece gives you some perspective: historically, rising yields alone haven't been a death sentence for stocks.

As always, it is my pleasure to serve you, and please reach out if you have any questions.

Until next time,

David Henderson

https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/stocks-can-still-perform-well-if-treasury-yields-hit-5-percent.html?utm_source=hartfordfunds.com&utm_medium=email&utm_campaign=2026-09-10-EM-Stocks_Can_Still_Perform_Well_If_Treasury_Yields_Hit_5_Percent_Broad&utm_content=practice_management&programID=11225&emailID=55614&mkt_tok=ODYxLVJXUy02OTkAAAGkKm4lqfyyBySBpleiFWrbcjAdlUTK_u1_GQLjT6wWwXrLa7iz2RzHPFIH048oO9F78ad9RbPnmAbRv3HIX7gSxFIXvQmC6pGYr0wxoqiTNDdEoA