Treasury yields are climbing again, with the 10-year yield moving above 4.2%. This is making investors rethink how soon the Federal Reserve might start cutting interest rates. While many Fed officials are still calling for rate cuts, they seem to be leaning toward smaller, more gradual reductions ahead of their big meeting in November.
Keith Lerner, a top strategist at Truist, says the rise in yields shows that investors are feeling more confident about the economy. Credit spreads—one indicator of market stress—are still low, which is a good sign.
However, this optimism could lead to a bumpier market, especially with the upcoming U.S. elections adding some uncertainty. Even with all this volatility, the S&P 500 is on track for its best year in any election cycle since the 1950s.