By: James Stanley, Sr. Strategist
Long-dated U.S. Treasuries keep sliding while the Nasdaq sets fresh record highs, a split that shows capital still favoring tech stocks over government bonds. Investors are avoiding long-dated Treasuries because yields keep rising, mortgage rates are spiking and the U.S. stock rally keeps drawing money away from bonds. 30-year U.S. Treasury yields have broken out of an ascending triangle on the charts, adding to the pressure on bond holders. Equity buyers, meanwhile, keep defending every pullback in the S&P 500 and the Nasdaq.
James Stanley, StoneX Media Senior Market Analyst, has more than two decades of market experience that began in equities and expanded into options, fixed income and foreign exchange. He analyzes price action alongside macroeconomic drivers on time frames of two days to two weeks, tracking how moves in Treasury yields, oil and currencies feed through to U.S. equity indices.
Long-dated U.S. Treasuries remain in a steady selloff as long-term yields climb, leaving the TLT long-dated Treasury bond fund firmly in a downtrend. "There's very little motivation for anybody to want to try to load up or get long on this thing right now," Stanley says of the fund. Mortgage rates are spiking alongside long-term Treasury yields, carrying the bond market's pain straight into U.S. housing. As a result, holders of long-dated Treasuries face mounting losses with no clear signal yet that the selloff is ending.
The Federal Reserve raised rates six times in 11 months heading into the 2000 tech peak, and U.S. Treasury bond futures rallied hard once yields turned lower. According to Stanley, 30-year Treasury bond futures "just built a massive epic rally" in that period, rewarding holders who clipped the coupon and then collected principal gains as yields fell. That rally followed a bubble burst that needed no outside shock. Stanley notes that "it doesn't have to be a black swan to pop a bubble. It can be rate hikes. It can be rate policy." In the 2000 episode, the long-dated Treasury payoff arrived only after rate pressure had broken the equity rally.
"Running yields don't matter until they do." That line captures the gap between the bond market and the Nasdaq, which keeps setting record highs as long-term U.S. Treasury yields climb. A rotation from tech stocks into long-dated Treasuries has historically required recession fears rather than high yields alone. Fiscal policy offers no relief either, with the U.S. Treasury secretary and the president both signaling more debt rather than austerity. Once growth slows or the AI companies behind the rally lose momentum, in Stanley's words, "you're going to get an exodus of capital from these high flying tech stocks and into something like Treasuries."
--- Written by Frédéric Guétin, StoneX Media Producer
--- Expert: James Stanley, StoneX Media Senior Market Analyst
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