MSX Research said in its Sept. 29 U.S. equity market note that the U.S. 10-year Treasury yield rose to 5.26%, with an intraday high of 5.293%, its highest level since 2007. The 30-year Treasury yield climbed to an intraday high of 5.6206%, the highest since 2002.
Over the past month, yields on 2-year, 10-year and 30-year Treasuries increased by about 50 basis points, 47 basis points and 32 basis points, respectively. In MSX’s view, that shows the market is demanding higher returns across long-duration dollar assets.
What is driving the move higher in yields
MSX pointed to three main drivers behind the rise in yields: energy prices raising inflation risks, continued resilience in the U.S. economy, and fast-growing corporate capital demand tied to AI and data center construction. The report also said expanding U.S. Treasury supply has pushed long-term investors to ask for greater term premium.
Stocks have not seen broad liquidation
Even with Treasury yields at fresh highs, U.S. equities have not gone through a clear wave of selling, according to the report. On Sept. 29, the S&P 500 fell 0.17% and the Nasdaq dropped 0.08%. As of that date, the S&P 500 was still up 12.1% year to date, while the Nasdaq was up 15.3%.
MSX said that suggests investors are reassessing valuations, but confidence in economic growth and corporate earnings has not fundamentally broken.
Real yields account for most of the increase
The note highlighted Deutsche Bank analysis showing that in the month through last Friday, the 5-year nominal Treasury yield rose by about 72 basis points. Of that move, about 66 basis points came from higher real yields, while only about 6 basis points came from inflation expectations.
By that reading, the bond market is not pricing only inflation concerns. It is also reflecting stronger economic growth, firmer investment demand and a repricing of real returns on capital.
MSX said the more fitting interpretation is not that rising Treasury yields will end the U.S. equity rally, but that stocks are moving away from a regime where valuations were lifted by low rates and toward one where earnings growth must justify value.
One-minute data snapshot
- 10-year Treasury yield: 5.26%, with an intraday high of 5.293%;
- 30-year Treasury yield: 5.59%, with an intraday high of 5.6206%;
- 2-year Treasury yield: 4.89%, up about 50 basis points from the start of September;
- 10-year Treasury yield: up 47 basis points from 4.79% at the start of September;
- 30-year Treasury yield: up 32 basis points from 5.27% at the start of September;
- The 10-year/2-year spread was about 37 basis points, keeping the yield curve positively sloped;
- U.S. job openings in August fell to 7.079 million, below the market expectation of 7.225 million;
- The market-implied probability of at least a 25-basis-point rate hike in October fell from nearly 70% intraday to about 51.5%.
MSX view: a higher hurdle rate for global assets
MSX said Treasury yields above 5% mean global assets once again face a higher benchmark return. During the low-rate era, companies could command elevated valuations if they could present a long-duration growth story. Now they need to show that earnings growth and returns on capital can consistently outperform a roughly 5% risk-free rate.
The firm said that is not automatically bearish for U.S. stocks. It may instead push the market to focus more closely on earnings quality. The U.S. economy is still growing, while AI capital spending, data center construction and corporate equipment investment continue to expand. Large technology companies, with stronger cash flow and balance sheets, may be better positioned to absorb valuation pressure from higher rates if they can keep earnings growth at a high level.
Some sectors may benefit
MSX said parts of the market could even gain from this backdrop. Banks may improve returns in some maturity-linked business lines if the yield curve stays positively sloped. Insurers and companies with large cash reserves may earn more interest income. Businesses with stable cash flow and pricing power may also find it easier to widen their competitive edge in a high-rate environment.
AI demand remains a focus, but efficiency matters more
For the AI sector, MSX said higher rates should not be read as a sign that demand is disappearing. On the contrary, part of the reason real yields are moving higher is that U.S. corporate investment and demand for AI infrastructure remain strong.
The change, according to the report, is that markets will pay closer attention to investment efficiency. Building more data centers and buying more GPUs is only the first step. Companies still need to prove those investments can be converted into cloud revenue, operating profit and free cash flow.
What to watch next
MSX said the next key indicators are core PCE, nonfarm payrolls and energy prices. If inflation gradually stabilizes while the economy and corporate earnings continue to grow, U.S. stocks may still remain resilient under higher interest rates.
The note concluded that Treasury yields have set a higher return hurdle for the market, but they also show capital is repricing growth, AI investment and long-term capital demand. For U.S. equities, the next phase is less about whether rates return to past lows and more about whether companies can justify higher valuations with stronger earnings and cash flow.
About MSX
MSX describes itself as an RWA trading platform focused on access to global financial markets. It said it is among the earlier on-chain U.S. stock trading platforms and offers spot and derivatives trading for nearly 400 tokenized stocks and pre-IPO assets, alongside services including U.S. equity spot and perpetual products, crypto-to-crypto trading, pre-IPO products and research.
The original report also included a risk reminder, saying macroeconomic conditions and the U.S. stock market can be highly volatile and that the material is for research observation only and does not constitute investment advice.