Stocks have been on a roller coaster ride in recent weeks, thanks to a surge in Treasury yields on fears that persistent inflation will lead the Federal Reserve to keep rates elevated. Traders at JPMorgan think the worst may be over. The bank's trading desk is now "tactically bullish" after weeks of being cautious on the market. That's driven "by a more constructive market setup based on improving macro fundamentals, consumer strength, earnings expectations, stabilizing bond yields, and supportive technicals." "After a rapid move higher in yields earlier in the week, bond yields stabilized, and we saw a sharp decline in both October rate-hike expectations," they said in a Monday note. "The moves in yields have concentrated markets and a broadening will be supportive for investor sentiment, which likely requires bond yields to hold or move lower." The benchmark 10-year Treasury note yield last week topped 5.3%, hitting its highest level since 2002. The 30-year bond yield also reached levels not seen in 24 years. US10Y YTD bar U.S. 10-year yield in 2026 However, yields eased from those highs later in the week, after the release of lighter-than-expected U.S. inflation and employment data . While the S & P 500 posted a small weekly loss, it posted back-to-back gains Thursday and Friday. JPMorgan traders still favor tech "as a core long," noting the "AI theme is likely to persist." They also like banks in part because of a potential steepening in the Treasury yield curve and "favorable capital markets outlook." Yields were little changed early Monday, but that could change later in the morning. The Institute for Supply Management is due to release its September reading on the U.S. services sector. The report has the potential to send yields back to toward those multidecade highs — or put downward pressure on rates.
