The bond market is sending a message that technology investors can no longer ignore. The U.S. 10-year Treasury yield touched 4.80% Tuesday, the highest since January 2025.
But the bond move is global.
Britain’s 10-year gilt yields 5.21% and Australia’s 5.14%, both at multi-decade highs. Even Japan, where the government borrowed for almost nothing for a decade, now pays 3.00%.
The trigger came from central bankers.
Last week, Chair Kevin Warsh said inflation has not slowed meaningfully and that the central bank still has “work to do.”
Traders now put the odds of a September rate hike near 66%. In Britain, markets price roughly 32 basis points of Bank of England tightening by year-end.
Eurozone inflation came in at 3.3% in August, now cementing another interest-rate hike by the European Central Bank in September.
Technology stocks are already feeling the heat.
On Tuesday, the Nasdaq Composite fell 0.7% and the S&P 500 lost 0.4%. The tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) traded down 1%.
Five Nasdaq 100 names fell more than 5% Tuesday morning.
- CrowdStrike Holdings Inc. (NASDAQ:CRWD) dropped 6.2% to $216.63.
- Astera Labs Inc. (NASDAQ:ALAB) fell 6.2% to $278.61.
- Lumentum Holdings Inc. (NASDAQ:LITE) lost 5.8% to $861.66.
- Axon Enterprise Inc. (NASDAQ:AXON) slid 5.7% to $534.06
- Teradyne Inc. (NASDAQ:TER) declined 5.3% to $331.35.
The Whole Curve Moved, Not Just The Long End
Over the past three months, the entire U.S. curve has lifted by roughly 30 basis points.
The two-year went from 4.04% to 4.37%, the 10-year from 4.45% to 4.77% and the 30-year from 4.97% to 5.25%. A basis point is one hundredth of a percentage point.
This is not a steepening. It is a repricing of every maturity at once.
The gap between the two-year and the 10-year has barely moved, at 40 basis points, down from 41 three months ago.
Why Tech Stocks Feel The Heat?
Technology carries more duration risk than any other part of the equity market.
These companies are valued on profits expected many years from now. Raise the rate used to discount those profits back to today and the value assigned today falls.
There is a second channel this cycle.
Tech companies have become heavy borrowers themselves, selling bonds to fund data centers and artificial intelligence capacity.
Higher yields raise the cost of that buildout at the same moment they compress the valuation of its payoff.
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