There's a reason the stock market doesn't like higher bond yields, and it has a lot to do with the burgeoning levels of government debt.
Treasury yields fell Tuesday , but the benchmark 10-year note remained above the psychologically important 3% level, a red line for investors who are sensitive to persistent inflation pressures and accompanying higher rates. One reason the higher rates matter so much is that the government is carrying a $30.4 trillion debt load , which low interest rates are a key to managing.
Those were commonplace in the 1970s; they would be very damaging now," DataTrek Research co-founder Nicholas Colas said in his market note late Monday. "This is why we say the famous 'Fed Put' has shifted from stocks to the Treasury market. [Fed Chair Jerome Powell] and the FOMC know that they must keep structural inflation at bay and Treasury yields low. Much, much lower than the 1970s.