STOCK MARKET / MAKING SENSE OF A ROLLER COASTER WEEK ON WALL STREET

GUEST BLOG / By Brock Weimer, CFA Investment Strategy with Edward Jones Company.

A roller-coaster week for rates: Separating opportunity from risk 

Key takeaways 

•Upward pressure on long-term Treasury yields weighed on investor sentiment, sending stocks lower last week. 

• Although the Treasury Department’s buyback announcement briefly pushed yields lower, the broader forces that we see driving yields higher remain in place. We continue to expect the 10-year Treasury yield to trade between 4.5% and 5.0% over the remainder of the year. 

• Higher yields have improved the multiyear return outlook for investment-grade bonds by increasing their income potential. However, with yields likely to remain range-bound in the near term, price appreciation may be limited, in our view. We recommend maintaining a neutral duration position relative to the U.S. investment-grade bond benchmark. 

• August and September have historically been seasonally weaker months for stocks, and uncertainty could rise as the midterm elections approach. While a period of near-term consolidation would not be surprising to us, resilient economic activity and strong corporate profit growth underpin a constructive backdrop for equities over the next 12 months, in our view. 

***

After a strong earnings season helped lift U.S. equity markets to record highs in August, stocks took a breather last week as the bond market moved to center stage. Rising long-term yields raised concerns about whether the economy and financial markets could continue to withstand higher borrowing costs, particularly as the 30-year Treasury yield reached its highest level since 2007 early in the week. 

Perhaps most surprising is that the latest rise in long-term yields has come on the heels of a weak July payrolls report, moderating inflation data, and reduced expectations for Federal Reserve rate hikes, conditions that would ordinarily place downward pressure on yields. 

The rise in long-term yields without a clear macroeconomic driver also caught policymakers’ attention. The Treasury Department announced that it would increase the size of its long-term Treasury buybacks beginning next month. Following the announcement, the 30-year Treasury yield fell by 0.1 percentage points on Wednesday, its largest one-day decline in more than a year. However, the reprieve proved short-lived, as long-term yields recouped much of the decline over the remainder of the week. 

In this week’s report, we unpack the forces putting upward pressure on longer-term yields and assess what they could mean for the economy and investor portfolios.

 Source: FactSet. Data as of mid-day 8/21/2026. Past performance does not guarantee future results. 

What's behind the move higher in long-term yields? 

Although no single macroeconomic development fully explains the upward pressure on longer-term yields, we believe several factors have contributed to the move over the past several months: 

• Higher bond supply: Elevated issuance of U.S. investment-grade corporate bonds may be contributing to the rise in yields. According to the Securities Industry and Financial Markets Association, or SIFMA, investment-grade U.S. corporate bond year-to-date issuance through July was 27.1% higher than during the same period in 2025. As discussed in our Monthly fixed-income focus, technology companies’ borrowing to fund artificial-intelligence investment has played what we consider to be an important role in the increase in corporate debt issuance. 

 • Ongoing geopolitical uncertainty: After falling below $70 per barrel in early July, West Texas Intermediate crude oil prices subsequently rebounded amid continued uncertainty in the Middle East and the flow of oil through the Strait of Hormuz. WTI rose back above $85 per barrel last week, adding to uncertainty about the outlook for global inflation. Encouragingly, however, market-based inflation expectations over the coming five- and 10-years remain contained. 

 • Upward pressure on global yields: The rise in longer-term government bond yields has not been unique to the United States. Long-term government bond yields in the United Kingdom, Japan, Canada, France and Germany have also moved toward multiyear highs. Although country-specific factors differ, the broadly synchronized increase may reflect a combination of heavier global government borrowing, renewed inflation uncertainty, and expectations that global policy rates could trend higher over the coming months. 

 • Investors demanding higher compensation to hold long-term bonds: Another factor contributing to higher long-term Treasury yields may be investors’ demand for greater compensation for the risks associated with holding longer-maturity bonds. The Federal Reserve Bank of New York publishes model-based estimates that decompose U.S. Treasury yields into two components: 

 1. The expected average path of short-term interest rates over the life of the bond. 2. The term premium, which represents the additional compensation investors require for the risk that interest rates may differ from expectations. 

According to the New York Fed’s model, the estimated 10-year Treasury term premium has generally moved higher in recent years, suggesting investors are requiring higher compensation to hold long-term bonds. However, the term premium remains relatively contained by historical standards and does not appear to signal immediate cause for concern. 

Source: FactSet, Federal Reserve Bank of New York. ACM 10-year Treasury Term Premium. 

In our view, some increase in the term premium is understandable given the current environment. Large fiscal deficits and growing federal borrowing needs have increased the supply of Treasury debt, which may require higher yields to attract investors. At the same time, the Federal Reserve’s reduced reliance on forward guidance under Chair Kevin Warsh may have increased uncertainty about the path of monetary policy. We believe that uncertainty is especially relevant at a time when geopolitical developments are clouding the outlook for inflation. All else equal, greater policy uncertainty may lead investors to demand additional compensation for holding longer-term bonds. 

Higher yields catch policymakers' attention 

After the 30-year Treasury yield reached its highest level since 2007 last week, the Treasury Department announced that it will increase purchases of off-the-run (not recently issued) Treasury securities with 10 to 30 years remaining until maturity. Beginning September 9, the maximum purchase amount will rise from $2 billion to at least $4 billion per operation. 

Although the increased purchases are small compared with the roughly $32 trillion Treasury market1, the announcement provided a powerful signaling effect, with the 30-year Treasury yield posting its largest daily decline in over a year. However, the program does not address the broader pressures that have contributed to higher yields, in our view, including large budget deficits, inflation uncertainty and increased debt supply. Reflecting this view, long-term yields recouped much of the initial decline. We expect these pressures to keep yields elevated, with the 10-year Treasury yield likely to trade between 4.5% and 5% over the remainder of the year. Looking forward, the administration is expected to unveil a fiscal consolidation initiative to help alleviate rising debt and funding costs, which may address some of the market uncertainty. 

While soft patches exist, corporate and economic activity have been resilient overall 

Interest-rate-sensitive parts of the economy have shown clear signs of weakness as borrowing costs have risen in recent years, with housing among the most affected sectors. Since the start of 2023, inflation-adjusted residential investment has been broadly flat and has contracted in five of the past six quarters. 

Last week, the NAHB/Wells Fargo Housing Market Index, a survey-based measure of homebuilder sentiment, edged up to 35 in August. However, it remained well below its 30-year average of approximately 51.5. Existing-home sales have also declined meaningfully as higher mortgage rates have reduced affordability for prospective buyers. 

Source: FactSet. 

The silver lining, in our view, is that other areas have remained resilient despite higher interest rates. On Friday, we learned that business activity remained solid in August, with the preliminary S&P Global Composite Purchasing Managers’ Index rising to 56.04, the highest reading since March of 2022. Household spending was also robust in the second quarter, with inflation-adjusted personal consumption rising at a 3.2% annualized rate. 

 Corporate earnings growth has also exceeded expectations this year. S&P 500 earnings are on pace to grow by more than 48% year-over-year in the second quarter, while full-year earnings are on pace to rise by 31%. Although strong profit growth among mega-cap technology companies has been a major contributor to the results for U.S. large-cap stocks, earnings strength has extended further down the market-cap spectrum. Earnings for U.S. small- and mid-cap stocks are also expected to grow by more than 20%. 

Source: FactSet. 

 Positioning portfolios in a higher interest-rate environment 

We expect fiscal concerns, increased bond issuance, broadly resilient economic activity, and uncertainty about inflation to keep interest rates higher for a while longer, though largely within a range of 4.5% to 5.0% for the 10-year Treasury over the remainder of the year. While this may limit the potential for meaningful price appreciation in bonds, we think higher yields have helped improve the longer-term appeal of investment-grade bonds and help reinforce their role as a strategic allocation in a well-diversified portfolio. 

We recommend investors maintain neutral duration exposure relative to the benchmark in U.S. investment-grade bonds. 

Against this backdrop, we believe the outlook over the next 12 months favors equities over fixed-income, particularly given the support from strong profit growth and healthy economic activity. Within equity markets, we acknowledge the potential for a period of near-term consolidation after what's been a solid move higher in 2026. August and September have historically been seasonally weaker months for stocks, and uncertainty could increase as the midterm elections approach, but periods of weakness may provide opportunities to add to equites, in line with your investment goals and risk tolerance. 

We specifically favor U.S. large- and mid-cap stocks, which we believe offer an attractive combination of quality, exposure to artificial intelligence, and sensitivity to continued economic resilience. We also favor emerging-market stocks, which we believe provide international exposure to strong profit growth tied to the AI buildout, while trading below their 10-year average forward price-to-earnings multiple. 

Source for all data not cited: FactSet. 1. Source: Treasury Department. Debt held by the public which does not include intragovernmental holdings of Treasuries. Brock Weimer Brock Weimer is responsible for analyzing economic data, assessing market trends, and supporting the development of resources that help clients work toward their long-term financial goals. 

About the Author: Brock Weimer graduated from Southern Illinois University Edwardsville with a bachelor's degree in economics and finance. He is a CFA® charter holder and member of the CFA Institute and CFA Society of St. Louis. 

Note: Edward Jones Company is the stockbroker of record with PillartoPost.org daily online magazine blog.

SUNDAY REVIEW / ORIGINAL FICTION: /SURVIVING A WEEK OF FROSH DANCE CLASSES

CHAZ 

A Short Story by Thomas Shess

 The night before the second day of freshman dance lessons, Chaz Blinkowsky prayed that Belinda would be assigned to him.  

He had not prayed often, and never for a girl.  

His mother had made certain he understood there was a God, but Chaz had always regarded prayer somewhat the way he regarded computer troubleshooting: something you tried after the obvious solutions failed.  

There was no obvious solution to Belinda.  

He had seen her the first afternoon when the girls from Our Lady Who Art in Heaven arrived at St. John Keller High School for Boys for the annual freshman dance lessons.  

Forty boys stood on one side of the gymnasium and easily as many girls stood on the other while Miss Daphne, the dance instructor, explained the fundamentals of social dancing to adolescents who would rather have been almost anywhere else.  

Miss Daphne, a fifty-four-year-old independent contractor, wore red shoes and clapped her hands when she wanted silence.  

“Gentlemen, cross the floor and introduce yourselves.”  

Nobody moved.  

She clapped twice.  

“Now.”  

That worked.  

Chaz had been paired with a girl named Monica, who was taller than he was and spent most of the lesson looking over his shoulder at someone else.  

Belinda had been three couples away.  

He kicked himself for not noticing her first.  

She was not the loudest girl in the room. 

She was not surrounded by friends. 

She did not laugh at everything the boys said.  

She simply stood there, waiting for the music.  

Chaz thought she was the most beautiful girl he had ever seen.  

That evening he went home thinking about her.  

At eleven-thirty, lying in bed and annoyed with himself because he could not stop thinking about her, he finally folded his hands. “God,” he whispered, “if you’re listening, could I dance with Belinda tomorrow?”  

He waited.  

Nothing happened.  

He considered adding something more religious.  

Nothing came to him. “Amen.”  

Then came a voice, a shrill falsetto in his ears—not a voice he expected: “Chester Jacob Blinkowsky.” God demanded attention. “My hands are tied. You are the only Jewish boy in an Augustinian school. Use your prayers for surviving ninth grade, never mind dance lessons.” 

Stunned, Chaz asked himself "did you really hear that? Or did mom get to God first?"  

The next afternoon, when Miss Daphne began pairing the students, Chaz tried not to stare across the gym.  

“Blinkowsky.”  

“Yes, ma’am.”  

“Belinda.”  

For one astonishing second, Chaz wondered whether God might actually be paying attention.  

Belinda crossed the floor toward him.  

“Hi.”  

“Hi.”  

Then Chaz stepped on her foot.  

“Oh, God. Sorry.”  

She laughed.  

They tried again.  

He stepped on the same foot.  

“I’m really sorry.”  

“It’s okay.”  

“No, it isn’t. You only have two feet and I’ve already damaged half your inventory.”  

That made her laugh again.  

Miss Daphne clapped from the center of the gym. “Gentlemen, left hand up. Right hand at the lady’s waist. Ladies, help them. Most of them are hopeless.”  

Belinda placed Chaz’s hand correctly.  

His palm rested against her waist.  

That created an entirely new problem.  

“You’re nervous,” she said.  

“I’m terrified.”  

“Of dancing?”  

“No.”  

“Of me?”  

Chaz looked at her. There seemed little reason to lie. “Yes.”  

She smiled.  

The music started.  

They moved.  

Chaz immediately went the wrong direction and stepped on her foot for the third time.  

“I’m so sorry,” he said. “I’m nervous.”  

“Don’t be. It’s only gym class.”  

“No, that’s not it.”  

“What is it?”  

He swallowed. At fifteen, Chaz could dismantle a computer and rebuild it. He could write code his teachers did not understand. He could diagnose a failing hard drive by the sound it made. None of those talents helped him now.  

“I prayed last night that you’d be my partner.”  

Belinda stopped moving.  

“You what?”  

“I prayed.”  

“For me?” She made the sign of the cross.  

“Yes.”  

“Why?”  

There was still time to invent something clever.  Chaz had nothing clever.  He blurted “Because you’re the most beautiful girl here.”  

Belinda stared at him.  

“And,” he continued, because humiliation apparently had no natural stopping point, “I was hoping you liked me.”  

For a moment she said nothing.  

Around them, shoes squeaked against the gym floor. Miss Daphne called out instructions. Someone laughed near the bleachers. Music crackled through the portable speakers.  

Belinda moved a little closer.  

She adjusted Chaz’s hand at her waist.  

“You’re thinking too much.”  

“I do that.”  

“I noticed.”  

“What should I do?”  

“Listen to the music. There’s a beat. Move your feet with it. It gets easier once you stop fighting it.” Aloud, she counted softly. “One, two. One, two.”  

Chaz followed. His shoulders loosened.  

Belinda stepped backward.  

This time he went with her.  

She moved left.  

He managed to move right without kicking anyone.  

She turned beneath his raised arm and came back toward him.  For the first time in two days of lessons, Chaz was dancing.  

Not well.  

But dancing.  

He smiled.  

“There,” Belinda said. “See?”  

He muttered, “I think I’m having a religious experience.”  

“Don’t push it.” She laughed.  

At that moment, the public address speaker in the gym activated. Everyone heard a familiar squeaky falsetto: “Miss Belinda Alvidrez, your ride is here. Meet at the reception area.”  

Belinda cupped her hands over Chaz’s ears as the PA voice repeated the message. 

For a few seconds he forgot about everyone else in the gym.  

Then Belinda leaned closer. The dancing began.  

Her mouth was near his ear. “I like you too, Chaz.”  

Those were forever words. He would remember them years later. Not simply the words, but the polished floor, the music, Miss Daphne’s red shoes and the impossible fact that Belinda Semma-Alvidrez had said them to him.  

They danced through two more foxtrots. Then, at the end, her expression changed.  

The smile vanished.  

Chaz felt her hand tighten around his.  

She was staring toward the gymnasium entrance. A man had entered. He was in his late twenties, broad through the shoulders, compact rather than bulky, with the hard posture of a man who had spent much of his life expecting trouble.  

The clothes caught Chaz first. A spotless white T-shirt under an open Hawaiian shirt, the pattern muted rather than loud. Sharply pressed khaki trousers rode high at the waist, the crease down each leg straight enough to have been drawn with a ruler. Dark leather shoes were polished to a dull shine.  His black hair was combed straight back and held there, smooth and deliberate. A narrow mustache ran precisely over his upper lip. 

There was something old-fashioned about him, something Chaz associated with photographs of San Diego and Los Angeles from another generation. He looked like an old-school pachuco who had survived long enough to become respectable without surrendering any of the menace.  

Not the exaggerated zoot-suit version from movies. No long coat, no watch chain, no broad-brimmed hat. This was the later version: cleaner, quieter, older, the same pride and same warning carried in smaller details.  Nothing about him seemed accidental. The white wife-beater T-shirt under his open Hawaiian shirt.  Even the way he stood. His feet were slightly apart, his arms loose at his sides. He did not lean against the wall or put his hands in his pockets. He occupied the doorway as though he had already decided where everyone in the room was and how quickly he could reach them.  

He did not look like a father arriving early.  

He did not look like a teacher.  

He looked like a thug.  Plain and simple.

The man surveyed the gym before he looked at Belinda. His eyes moved first to the doors. Then the bleachers. Then the windows. Then the boys. Then the adults. Then, finally he stared at Chaz as if he had a shooting range target pasted on his ass.

Only after completing that inspection did he look directly at her.  

Chaz noticed the sequence.  

So did Belinda. The change in her was immediate.  

A moment earlier she had been smiling at Chaz. Now she wasn’t. Her shoulders tightened. Her hand stopped moving in his. Even the expression in her eyes changed, as though someone had reached inside her and turned off the afternoon.  

“Who is that?” Chaz asked.  

Belinda hesitated.  

“My bodyguard.”  

Chaz thought he had heard her wrong.  

“Your what?”  

“My bodyguard.” she said in a softer voice.

He looked at the man again.  

Her words changed everything.  

Until that moment Chaz had thought he was simply some severe relative, perhaps an uncle or one of those family friends adults expected children to obey.  

A bodyguard was different. Bodyguards belonged to presidents, movie stars, billionaires and men whose names appeared in newspaper stories involving words like kidnapping, extortion and organized crime.  

Fifteen-year-old schoolgirls did not ordinarily have bodyguards waiting outside freshman dance lessons.  

“Why do you have a bodyguard?”  

“My father hired him.”  

“Criminy what for? What does your father do?”  

Belinda looked away.  

“Business.”  

“What kind of business?”  

She did not answer.  

Across the gym, the man crooked one finger.  

Belinda stiffened.  

“Belinda," called Miss Daphne, your ride is here.”  

The bodyguard flicked his head to one side motioning for her to move to the exit.

Belinda released Chaz’s hand. “I have to go.”  

“Right now? We're in the middle of class."  

“Yes.”  

“Why?”  

“My father doesn’t like me being anywhere without security.”  

Chaz looked again at the man.  He had never known anyone who had security.  Not at St. John Keller.  

Not anywhere.  

The bodyguard crossed the floor toward them.  Up close, Chaz noticed a faint scar running from the man’s left ear toward his jaw.  “Belinda,” the man said. “Vámonos.”  

“We’re still dancing.”  

“No. You’re finished.”  

Belinda looked embarrassed. “I’ll see you tomorrow,” she told Chaz. "I will be your partner/"

Chaz beamed. “Will you?”  

She smiled, but only slightly.  

“I hope so.”  

The bodyguard turned toward the exit.  

Belinda followed.  

Chaz watched them walk away.  

Near the gym doors, the man placed one hand against Belinda’s upper arm and guided her into the corridor.  

Not violently. But firmly enough that Chaz noticed. 

He later learned, the man was annoyed that he had to come retrieve her at the gym instead of the front office.  

Belinda looked back once at Chaz and smiled. Then she disappeared through the doors.  

Miss Daphne clapped twice.  

“Blinkowsky! Your partner appears to have been recalled. Come here, I will be your partner.

The gym was filled with laughter.

Chaz barely heard them. He froze in the middle of the gym staring at the empty doorway.  

A fifteen-year-old girl in a short plaid skirt with a bodyguard.  

A father who insisted on security even during a school dance class.  

A man who checked every exit before looking at the girl he had come to collect.  

Something about that did not fit into the world Chaz knew. He had grown up around accountants, teachers, rabbis, an absent father, mechanics, shop owners, priests and parents who worried about grades.  

None of them had bodyguards.  He knew almost nothing about Belinda Semma-Alvidrez. But he knew one thing now. Whatever her father did for a living, somebody was afraid of him.  

Or somebody wanted him hurt.  

Chaz was burning inside. Tomorrow, if someone in the gym claimed Belinda before he could, there was going to be trouble.