The Markets

The bond market isn’t happy.

The United States Treasury market is the biggest and most liquid government bond market in the world. Throughout 2026, rates on U.S. Treasuries have increased. The benchmark 10-year Treasury started the year at 4.2 percent and ended last week at 4.8 percent. The 2-year Treasury note rose more sharply, from 3.6 percent in January to 4.5 percent last week.

Rates move higher for a variety of reasons. Alex Rosenberg, Karishma Vanjani, and Martin Baccardax of Barron’s reported on the primary drivers for 2026, which include:

  • Sticky inflation. When prices rise, lenders demand higher yields to protect the value of the money they'll be repaid in the future. In addition, the Federal Reserve has signaled it will keep interest rates high until inflation returns to its 2 percent target.
  • Rising government debt. The U.S. government finances its debts by issuing Treasuries. Higher debt means more Treasuries are sold. The growing supply of Treasuries puts upward pressure on rates.
  • Growing competition from corporate bonds. U.S. companies have been issuing a lot of high-quality bonds to support new projects. The flood of new bonds also pushes rates higher.

The U.S. is not alone. Rates on government bonds have been rising in countries around the world.

Higher Treasury Rates Affect Investors and Consumers

Rising rates are good news and bad news. The bad news for bondholders is the inverse relationship between interest rates and prices. As rates rise, bond prices fall. The good news is that income-oriented investors can purchase bonds with rates that are higher than they’ve been in a long time.

The stinger for consumers is that the 10-year Treasury is the benchmark rate for mortgage rates. In addition, Treasuries influence rates on auto loans and credit cards. When rates rise, borrowing typically becomes more expensive. On the plus side, higher rates usually help bring inflation lower.

Last week, major U.S. stock indexes delivered mixed performance. The Standard & Poor’s 500 Index and Nasdaq Composite were flat, while the Dow Jones Industrial Average declined. Yields on most intermediate and longer maturities of U.S. Treasuries ticked higher.


Data as of 9/4/26 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 Index 0.1% 12.8% 18.7% 19.7% 11.3% 13.4%
Dow Jones Global ex-U.S. Index 0.0 15.0 24.3 16.9 5.9 6.8
10-year Treasury Note (yield only) 4.8 N/A 4.2 4.3 1.4 1.5
S&P GSCI Gold Index -1.2 3.1 24.1 31.9 20.0 12.7
Bloomberg Commodity Index 1.9 30.3 39.0 10.2 8.3 5.5

S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

What Do You Know About the Economic Menagerie?

If you’ve ever listened to the financial news, you know that pundits frequently rely on animal metaphors to communicate their points. Bull and bear markets are a case in point. Bulls charge forward and thrust their horns up on the attack, while bears employ downward paw strikes. Bull markets trend higher, while bear markets trend lower. Both animals are unpredictable and strong; volatile like financial markets can be. See what you know about the animal metaphors Wall Street relies on by taking this brief quiz.

  1. Economist John Maynard Keynes believed that people’s instincts and emotions influence their behavior and financial choices. He argued that we spend or invest based on our outlook for the future, and that emotional urges drive economic booms and busts. What term did he use to describe this idea?
    1. Herd mentality
    2. Market mood swings
    3. Animal spirits
    4. Bullish instincts

  2. A central banker who favors moving interest rates higher to fight inflation or cool the economy is known as a hawk. What is the term used to describe someone who favors moving interest rates lower to spur economic growth?
    1. A meercat
    2. A dove
    3. A chickadee
    4. A mouse

  3. There are two theories about investors and dividends. One holds that stock investors are indifferent to whether gains come from stock dividends or gains. The other says that investors prefer dividend-paying stocks because dividends are generally stable and make returns more predictable. What is the latter theory called?
    1. The Bird-In-Hand Theory
    2. The Nest Egg Theory
    3. The Cash Cow Theory
    4. The Fishbone Theory

  4. In business, a company becomes a “unicorn” when it reaches a certain milestone. What is that milestone?
    1. A valuation of $1 billion or more
    2. Annual profits of $100 million or more
    3. Annual sales of $100 million or more
    4. A stock price of $5,000

If you have questions about bulls, bears, or other financial jargon, let us know. We’re happy to translate.

Weekly Focus – Think About It

“An expert is a person who has made all the mistakes that can be made in a very narrow field.”

–Neils Bohr, Physicist

Answers: 1) c; 2) b; 3) a; 4) a

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
  • Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
  • The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
  • All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
  • The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
  • Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • Past performance does not guarantee future results. Investing involves risk, including loss of principal.
  • You cannot invest directly in an index.
  • Stock investing involves risk including loss of principal.
  • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
  • The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
  • The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
  • Consult your financial professional before making any investment decision.

https://www.axios.com/2026/08/31/bonds-yields-wigglesworth-book

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2026

https://www.barrons.com/articles/bond-market-strategy-rising-yields-portfolio-c278240d or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/09-08-26-Barrons-Death-of-a-Safe-Haven%203.pdf

https://www.investopedia.com/terms/b/bond.asp

https://www.minneapolisfed.org/article/2025/what-drives-consumer-interest-rates

https://www.investopedia.com/ask/answers/12/inflation-interest-rate-relationship.asp

https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/09-08-26-Barrons-DJIA-S&P-Nasdaq%20-%207.pdf

https://www.investopedia.com/ask/answers/bull-bear-market-names/

https://www.imf.org/en/publications/fandd/issues/2025/03/how-animal-spirits-affect-the-economy-karthik-sastry

https://www.kansascityfed.org/research/economic-bulletin/understanding-hawks-and-doves-2018/

https://www.investopedia.com/terms/b/bird-in-hand.asp

https://www.gsb.stanford.edu/insights/explainer-what-unicorn

https://www.goodreads.com/quotes/5-an-expert-is-a-person-who-has-made-all-the

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