Drop in Treasury Yields May Help Stocks, But This Level Matters
Sevens Report says bond market must stabilize to support equities
Drop in Treasury yields may provide ‘tailwind’ for stocks — but watch out for this level
Friday’s drop in Treasury yields offered a short-term boost to equities, but Sevens Report Research says investors should remain cautious.
Tom Essaye, founder of Sevens Report, said the 10-year Treasury’s fall to around 4.2% brings it to “a more positive level” for stocks. However, he emphasized that yields need to stabilize and be confirmed by incoming economic data in order to become a “new tailwind” for the market.
Essaye warned that if yields continue to drop sharply—particularly if the 10-year approaches 4.00%—it could indicate a deeper concern. “That will not be positive for stocks as it’ll signal more of a growth scare versus anything positive,” he wrote Monday.
For now, the bond market isn’t flashing warning signs. But Sevens says the next few data points will be key to determining if yields are helping—or hurting—the rally.
Also, click here to view the full article published in MarketWatch on August 4th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.
If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.
To strengthen your market knowledge take a free trial of The Sevens Report.
Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.
