Capstone July 22 2026

By Bryce Pease CFP® Accredited Investment Fiduciary® Casey Morris CFP® Capstone Pacific Investment Strategies, Inc. California, Colorado, Nebraska

In our last article we said we’d talk about what is for many people a boring and obscure topic that’s actually one of the pillars that prop up our economy – treasury yields.  The bond market is something that tends to hum along in the background, mostly unnoticed.  But every so often, something happens with bonds that makes headlines.  Like on May 19 when the yield on 30-year Treasury bonds hit their highest level since 2007.1

For most people, that last sentence likely has no emotional impact whatsoever.  But Treasury yields are actually a key indicator for where the economy might be headed, and they can have an indirect impact on the stock market, too. While yields have gone down somewhat in recent weeks, the factors that caused the spike may not go away anytime soon. So, we thought it would be a good idea to explain what headlines like this are all about and why the topic matters.

Let’s start by breaking down what we mean by “yield.”  To put it simply, a bond’s yield is the return an investor expects to gain until a bond matures. Yields can be determined by dividing the bond’s annual interest rate payment by its price. For example, imagine an investor, whom we’ll call Bryce, buys a U.S. treasury bond with a 10% interest rate for $1,000. The bond’s yield would be 10%, too. But now imagine that Bryce sells that bond to Casey a year later…but for $75 more than his initial $1000 investment ($1,075).

Since the bond is being traded for more than its original value, the yield would go down to 9.3%. (After all, if Casey pays more than Bryce for the same 10% interest rate, she’s getting a lower return on her investment than Bryce did.)  However, if Bryce sold the bond for less than he originally paid — say, $975 — then Casey’s yield would rise to 10.25%.  Based on this example, we can see that yields and high quality U.S. treasury bond prices are inversely related.  If a bond’s price goes up, its yield will go down.  If the price goes down, the yield goes up. This is an example only using 10% to more easily understand the concept.  This is not a recommendation to buy or sell any bonds or other securities.  There are no treasury bonds currently paying that kind of interest, not even close.  In our next article we’ll talk about how some experts use the changes in interest rates to forecast the future direction of our economy.

Casey and Bryce

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