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Sevens Report: 10-Year Yield Drop Below 4% Could Break ‘Bad News Is Good’ Trade

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Tom Essaye warns a fast move lower would signal economic anxiety, not relief

A sudden move below 4% on 10-year Treasury note yield could kill the ‘bad news is good’ market vibe

Lower yields can be a positive for stocks, foremost by making equities more attractive in comparison. But context matters, and a sudden drop could serve to unnerve investors who have largely continued to view negative economic news as a positive because it reinforces expectations for the Federal Reserve to resume cutting interest rates later this month, said Tom Essaye, founder of Sevens Report Research, in a note.

“The 4.00% level on the 10-year yield is important and if we move quickly through that level, it will signal more economic anxiety and that will further undercut the ‘bad-is-good’ narrative around weak data and Fed rate cuts (point being, if the 10-year yield falls quickly through 4.00% and heads lower, bad data will be bad for stocks because it’ll signal rising chances of an economic slowdown),” he wrote.

Also, click here to view the full article published in MarketWatch on September 9th, 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.

Drop in Treasury Yields May Help Stocks, But This Level Matters

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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.

2025 Market Risks: Pullback Causers vs. Rally Killers

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • 2025 Market Risks: Pullback Causers vs. Rally Killers

Futures are lower with EU shares as escalating geopolitical tensions are driving risk-off money flows this morning.

Overnight, Russian President Putin approved a doctrine that lowered the threshold for the use of nuclear weapons and shortly thereafter, Ukraine reportedly launched their first long-range ballistic missile attack on targets in Russia prompting risk-off/safe-haven money flows.

Economically, Eurozone HICP (CPI equivalent) was inline in October with a headline of 2.0% y/y and 2.7% y/y Core which did not materially move markets amid the geopolitical developments.

Today, the fluid geopolitical situation in between Russia and Ukraine will be in focus as the uncertainties surrounding the next steps in the conflict will likely drive risk-aversion until some degree of clarity emerges.

Domestically, there is one economic report due to be released: Housing Starts (1.3M) and two Fed speakers to watch: Goolsbee (12:25 p.m. ET) and Schmid (1:10 p.m. ET). Barring a big surprise in the data or any meaningfully dovish or hawkish changes in rhetoric, the data and Fed speakers will not likely move markets materially.

Finally, on the earnings front we will get quarterly results from WMT ($0.53), LOW ($2.81) and MDT ($1.24) today.

Join thousands 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.

The Fed Pivot Has Already Occurred

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The Fed Pivot Has Already Occurred: Tom Essaye Quoted in MarketWatch

Here’s when falling bond yields might become a problem for stock-market bulls in 2024

Heading into 2024, the path of least resistance for Treasurys is for higher prices and lower yields (prices and yields move opposite each other), “although the decline in yields won’t be the boost for stocks in 2024 as it was in 2023, because if it keeps going and we see the 10-year yield break through support at 3.75% and keep dropping towards 3.00%, investors will interpret that as an economic warning sign now that the Fed pivot has already occurred,” said Tom Essaye, founder of Sevens Report Research, in a Friday note.

Also, click here to view the full MarketWatch article published on December 29th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up 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.

Treasury Yields To Continue To Drive Short-Term Trading

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Treasury Yields To Continue To Drive Short-Term Trading: Tom Essaye Quoted in Barron’s

Stocks Extend Rally After Best Week of the Year

“Today there are no notable economic reports and just one Fed speaker, [Lisa] Cook (11:00 a.m. ET), so look for Treasury yields to continue to drive short-term trading,” writes Sevens Report Research’s Tom Essaye.

The 10-year Treasury yield ticked higher on Monday but was still at 4.614%. The 10-year yield was trading around 5% in October, which weighed on rate-sensitive stocks.

“If the 10-year yield continues to decline then the S&P 500 can extend last week’s rally.”

Also, click here to view the full Barron’s article published on November 6th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to Rally

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.

We Get a Lot of Important Reports Later This Week

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A Lot of Important Reports: Tom Essaye Quoted in Barron’s

Stocks Fall as 10-Year Yields Touches 5%

Sevens Report Research’s Tom Essaye writes that the economic calendar is quiet on Monday, so yields will continue to be in focus. He thinks the higher yields go, the lower stocks will fall.

“Today, any progress on electing a Speaker of the House will be welcomed by the markets and likely push yields lower,” Essaye writes. “On the earnings front, we get a lot of important reports later this week.”

Also, click here to view the full Barron’s article published on October 23rd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to Rally

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.

The 10-Year Yield Sits at 5.00%

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The 10-Year Yield Sits at 5.00%: Tom Essaye Quoted in Barron’s

10-Year Treasury Yield Hovers Around Milestone 5% Level, Adding Pressure to Stocks

“The 10-year yield sits at 5.00% as of this writing. And the higher it goes today, the lower stocks will likely fall,” said Tom Essaye, founder of Sevens Report Research. “Today, any progress on electing a Speaker of the House will be welcomed by the markets and likely push yields lower.”

The recent, dramatic march higher in yields has added significant headwinds for stocks. Because higher returns on risk-free government debt tend to dampen demand for riskier bets, such as equities.

Also, click here to view the full Barron’s article published on October 23rd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

The 10-Year Yield

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.

Another Reason Treasury Yields Are Rising

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What’s in Today’s Report:

  • Another Reason Treasury Yields Are Rising

Futures are modestly lower on more negative real estate news from China while Japanese inflation was hotter than expected.

Chinese real estate firm Evergrande filed for bankruptcy overnight, increasing concerns about the Chinese property market specifically and economy more broadly.

Economically, Japanese CPI was in-line (up 3.3% y/y) but services inflation rose to 2%, a 30 year high, and that’s increasing expectations the BOJ may get more hawkish (and that would put more upward pressure on global bond yields, which would increase the headwind on stocks).

Today there are no notable economic reports nor any Fed speakers so focus will remain on Treasury yields, and the market needs stability in yields for stocks to bounce back.  A sudden drop in yields on growth concerns (which is what we’re seeing this morning) or a sharp rally in yields (on inflation concerns) will only further pressure stocks, so the sooner yields can “calm down” and trade little changed, the better for stocks.

Tom Essaye Quoted in Barron’s on August 15th, 2023

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Stocks Could Be Sandbagged by Rising Treasury Yields

“That’s why rising Treasury yields are a problem for stocks, because investors will rotate out of riskier equities and into less-risky bonds because the additional return in stocks isn’t worth the volatility,” argues Essaye, who believes that while the current environment makes the historical 4% risk premium unlikely, a “fair” number for 2023 is “definitely higher than 1%!”

Click here to read the full article.

How Far Could This Relief Rally Run?

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What’s in Today’s Report:

  • Technical Support for a Near Term Bottom and How Far This Relief Rally Could Run
  • Chart: 10-Yr Note Futures Test Trend Resistance
  • Housing Market Update

Stock futures are trading lower this morning as soft tech earnings are overshadowing a continued bounce in bonds.

MSFT and GOOGL both fell roughly 6% overnight after delivering disappointing quarterly results yesterday afternoon which is dragging the broader tech sector lower in premarket trading.

Today, there are two economic reports to watch in the morning: International Trade in Goods (E: -$87.8B) and New Home Sales (E: 585K), while there is a 5-Yr Treasury Note auction in the early afternoon (1:00 p.m. ET).

Earnings will remain in focus today with BA (-$0.01), BMY ($1.83), HLT ($1.25), KHC ($0.55), and HOG ($1.45) reporting before the bell, and META ($1.88), F ($0.31), and CP ($0.77) releasing results after the close.

Bottom line, soft earnings out of mega-cap tech are weighing on the market this morning however stable bond markets are limiting losses. If we see Treasuries roll over today and yields begin to climb again, expect pressure on equities to pick up as both earnings expectations and multiple compression will weigh on stocks broadly.