--- title: "From 4.9% to 5.3%: What is the market pricing in for this 40bp move in 30-year US Treasuries..." type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/43480579.md" description: "On August 18, the US 30-year Treasury yield rose to around 5.34% in intraday trading, hitting a high not seen since 2007; the 10-year yield briefly approached 4.75%. On the same day, the S&P 500 fell 0.7%, the Nasdaq 100 dropped 1.7%, and the Philadelphia Semiconductor Index declined 5.6%. A clear negative correlation emerged between long-end rates and high-duration tech stocks. From June 18 to August 18, the 2-year Treasury yield remained largely flat, while the 10-year rose by approximately 25 basis points (bps) and the 30-year by about 38 bps. As the yield curve steepened..." datetime: "2026-08-19T09:31:55.000Z" locales: - [en](https://longbridge.com/en/topics/43480579.md) - [zh-CN](https://longbridge.com/zh-CN/topics/43480579.md) - [zh-HK](https://longbridge.com/zh-HK/topics/43480579.md) author: "[潘驴邓晓闲缺一](https://longbridge.com/en/profiles/27015735.md)" generator: "portal-rs" --- # From 4.9% to 5.3%: What is the market pricing in for this 40bp move in 30-year US Treasuries... On August 18, the yield on the US 30-year Treasury note climbed to around 5.34% in intraday trading, hitting its highest level since 2007; the 10-year yield briefly approached 4.75%. On the same day, the S&P 500 fell 0.7%, the Nasdaq 100 dropped 1.7%, and the Philadelphia Semiconductor Index declined 5.6%. A clear inverse pricing dynamic emerged between long-end rates and high-duration tech stocks. From June 18 to August 18, the 2-year Treasury yield remained largely flat, while the 10-year rose by approximately 25 basis points (bps) and the 30-year by about 38 bps. As the yield curve steepened, the 10-year real yield increased from 2.21% to 2.41%. This rise in the long end has placed a clear constraint on US equities: **while earnings continue to grow, the rising discount rate simultaneously lifts valuation hurdles. Index gains are increasingly reliant on EPS realization, with the contribution from multiple expansion diminishing.** **I. The core 40-basis-point increase stems from real rates** On June 18, US 2-year, 10-year, and 30-year Treasury yields were 4.19%, 4.46%, and 4.90%, respectively; by August 18, they stood at approximately 4.19%, 4.71%, and 5.28%. The 2-year end saw no significant move, while the 30-year end cumulatively rose 38 bps, widening the 2y–30y spread from 71 bps to 109 bps. | Metric | June 18 | August 18 | Change | | ------------------------- | ------- | --------- | ------- | | **2-Year Nominal Yield** | 4.19% | 4.19% | 0 | | **10-Year Nominal Yield** | 4.46% | 4.71% | +25 bps | | **10-Year Real Yield** | 2.21% | 2.41% | +20 bps | | **30-Year Nominal Yield** | 4.90% | 5.28% | +38 bps | Of the 25 bps gain in the 10-year nominal yield, real rates contributed roughly 20 bps, with implied inflation compensation adding only about 5 bps. The San Francisco Fed's term structure model shows that between July 29 and August 17, the average expected overnight rate over the next decade edged down slightly from 3.44% to 3.43%, while the term premium rose from 1.31% to 1.37%. Policy rate expectations changed little, but long-term risk compensation increased. **The variables most sensitive to equity valuations have shifted toward real rates and term premiums. As long as these two indicators remain elevated, the Federal Funds rate ceasing to hike will not automatically restore valuation elasticity to growth stocks.** **II. US Equity Earnings Remain Strong, but Valuation Cushion is Thin** Data from FactSet through August 7 shows that blended S&P 500 Q2 earnings grew 50.4% year-over-year; excluding large non-operating gains from Alphabet and Amazon, the growth rate remained around 32%. Market consensus expects earnings growth of 27.4% and 25.2% for Q3 and Q4, respectively. In Q2, the Information Technology sector saw revenue growth of 35.9% and earnings growth of 70.4%, with semiconductor and equipment revenues surging 77%. Current constraints are concentrated on the valuation side, not the earnings side. S&P 500 Forward P/E (Next 12 Months) **20.0x** Implied Earnings Yield **\~5.0%** 10-Year Treasury Yield **\~4.7%** 10-Year Real Yield **\~2.4%** A 20x forward P/E implies an earnings yield of roughly 5%, which is very close to the ~4.7% yield on the 10-year Treasury. While this spread cannot be directly viewed as the standard equity risk premium, it characterizes the current valuation environment: after risk-free assets offer nearly 5% nominal returns, equities require higher earnings growth, cash flow realization, and risk compensation just to maintain existing valuations. From late June to August 7, the S&P 500's forward P/E (next 12 months) fell from 20.4x to 20.0x. During the same period, the index rose 2.8%, and forward EPS estimates were revised up by 4.7%. Recent index gains have been driven primarily by upward earnings revisions, while valuation multiples actually contracted. **III. For every 50-basis-point rate hike, high-duration assets need more earnings to offset** Using first-order duration to approximate valuation sensitivity, a 50 bps rise in the long-term discount rate impacts the static valuations of 10-, 15-, and 20-year equity duration assets by approximately -5.0%, -7.5%, and -10.0%, respectively. This calculation is used to assess the headwinds that earnings revisions must cover and does not correspond to specific target prices. | Equity Duration | +25 bps | +50 bps | +75 bps | | --------------- | ------- | ------- | ------- | | **10 Years** | -2.5% | -5.0% | -7.5% | | **15 Years** | -3.8% | -7.5% | -11.3% | | **20 Years** | -5.0% | -10.0% | -15.0% | Note: ΔP/P ≈ -Duration × Change in Discount Rate; for sensitivity analysis only. Taking a 15-year equity duration as an example, if an AI company's future earnings expectations are revised up by 10%, while the long-term discount rate rises by 50 bps concurrently, the static valuation pressure is approximately 7.5%. Holding other variables constant, the net contribution of the earnings revision to the stock price leaves only about 2.5 percentage points. The hurdle for high-valuation assets to rise shifts from "earnings growth" to "the magnitude of earnings revisions must consistently exceed the degree of valuation compression." **IV. Sector Divergence Depends on Valuation, Duration, and Cash Flow Quality** **AI & Semiconductors:** Q2 profit growth rates for IT and semiconductors remain high, with no systemic inflection point in fundamentals yet. Rising long-end rates first compress valuation multiples and raise market requirements for order visibility, gross margins, free cash flow, and earnings visibility for 2027–2028. Leaders like NVIDIA and Broadcom, with strong cash flows and sustained earnings revisions, possess greater absorption capacity; companies with high 远期 earnings proportions and weak free cash flow are more sensitive to interest rates. **Software & Unprofitable Growth Stocks:** Enterprise value is concentrated more in 远期 cash flows, resulting in generally longer equity durations. With the 10-year real yield holding around 2.4%, P/E or P/S compression may occur even if revenues have not deteriorated. If growth expectations slow synchronously, the elasticity of valuation adjustment will be higher than that of semiconductor leaders whose earnings have already been fully realized. **Industrials & Consumer Discretionary:** FactSet data shows the forward P/E (next 12 months) for these two sectors is approximately 25.2x and 24.3x, both higher than the broader S&P 500. Themes such as data centers, power equipment, and manufacturing capex have already driven re-rating in some traditional industries. Rising long-end rates will similarly compress the pricing space for these "high-valuation industrial stocks." **Financials:** The forward P/E is approximately 15.5x, significantly below the index average. Curve steepening benefits asset-side yields for some banks, but duration loss, funding costs, and credit risk still need simultaneous assessment. Financials hold a relative valuation advantage, but one cannot draw a blanket bullish conclusion solely from rising long-end rates. **V. Three Interest Rate Scenarios Correspond to Three US Equity Pricing Frameworks** | Scenario | 10-Year Treasury | 30-Year Treasury | US Equity Pricing | | --------------------------- | ---------------- | ---------------- | --------------------------------------------------------------------------- | | **Rates Retreat** | 4.3%—4.5% | Below 5.0% | Growth stocks regain room for multiple expansion | | **High-Side Consolidation** | 4.6%—4.8% | 5.1%—5.3% | Index relies mainly on earnings growth; multiple expansion constrained | | **Breakout Again** | Above 5.0% | Above 5.4% | High-duration assets enter a more pronounced phase of valuation compression | Note: Ranges are for scenario analysis and do not constitute predictions for index levels or interest rates. The second scenario holds more research value for H2 2026. Keeping the 10-year Treasury at 4.6%—4.8% and the 30-year at 5.1%—5.3% is insufficient to directly trigger a US bear market; its effect is mainly reflected in capping valuation ceilings. If EPS continues to grow at over 20%, the index can still advance, but returns will rely more heavily on earnings growth, making P/E expansion significantly harder. In simple arithmetic, 10% EPS growth can translate almost entirely into 10% stock price growth if the 20x P/E remains unchanged; if the P/E drops from 20x to 18x concurrently, representing ~10% valuation compression, the earnings growth is almost completely offset. When long-end rates remain high, index earnings growth and valuation changes must be modeled simultaneously. **VI. Conclusion: In a High-Rate Environment, US Equities Enter the Earnings Realization Phase** Current data does not yet support a systemic bear market turn for US equities. Q2 saw continued high earnings growth in the S&P 500 and tech sectors, with AI capex and semiconductor revenues remaining resilient. Constraints on the valuation side have intensified significantly: the 10-year real yield is ~2.4%, the 10-year nominal yield ~4.7%, the 30-year yield has entered above 5%, while the S&P 500 forward P/E remains around 20x. Priority should be given to tracking three sets of variables: whether the 10-year real yield retreats; whether the 10-year term premium converges from near 1.37%; and whether forward EPS estimates for the S&P 500 and tech sectors continue to be revised up. If real rates and term premiums stay elevated, earnings revisions will become the main support for index gains; if earnings expectations turn downward, high-valuation assets will face pressure from both the numerator and denominator ends. **The rise of the 30-year Treasury from 4.9% to 5.3% sends a clear signal for equities: when the risk-free rate approaches 5% and real rates hold around 2.4%, US equities can still rise on earnings growth, but tolerance for valuation compression drops significantly. The next phase should focus on judging whether the magnitude of earnings revisions can continuously cover valuation compression.** Data sources: US Department of the Treasury, Federal Reserve Board, San Francisco Fed, FactSet; market data as of August 18, 2026. Valuation sensitivity analysis herein is for illustrative purposes and does not constitute investment advice. ### Related Stocks - [SQQQ.US](https://longbridge.com/en/quote/SQQQ.US.md) - [QQQE.US](https://longbridge.com/en/quote/QQQE.US.md) - [TQQQ.US](https://longbridge.com/en/quote/TQQQ.US.md) - [.NDXTMC.US](https://longbridge.com/en/quote/.NDXTMC.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) - [VOOG.US](https://longbridge.com/en/quote/VOOG.US.md) - [EFIV.US](https://longbridge.com/en/quote/EFIV.US.md) - [IVE.US](https://longbridge.com/en/quote/IVE.US.md) - [IVV.US](https://longbridge.com/en/quote/IVV.US.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**