US markets head for weekly gains despite the rout in bond markets; here is all you need to know

US Treasury yields stage a smart pullback from multi-decade high levels on Friday, alleviating fears of high borrowing costs. The volatility continued in the bond markets as US Treasuries saw a massive selloff in bond prices, impacting equity market sentiment as well.

Investors assessed the risks of geopolitical instability in the Middle East region after the US and Iran agreed to reopen the Strait of Hormuz in a phased manner and lift the blockade on Iranian ports.

Consequently, Brent crude oil prices fell by over 1.7% to hit an intraday low of $97.8 per barrel on Friday, while WTI crude oil prices fell over 2.4% to hit $92 per barrel. Brent crude oil prices headed for a second consecutive week of losses as uncertainty ebbed in the Middle East region.

However, bond yields saw one of the sharpest spikes in the past few years this week. The US 10Y yields surged 175 bps this week, hitting two-decade high levels of 5.2%. Similarly, the US 30Y surged 141 points, hitting 5.45% this week.

The sharp spike in yields followed a 25 bps interest rate hike by the Federal Reserve in the previous week. In addition, the bond markets also shrugged off intervention efforts made by Treasury Secretaries by increasing the bond buyback program to $6 billion.

The rising Treasury yields put pressure on government expenditure as the cost of debt increases dramatically. Meanwhile, economists now expect interest rates to remain elevated in 2026, creating room for one more rate hike in the remaining months this year.

US equities head for weekly gains

Despite the volatility and sharp swings in Treasury yields, the NASDAQ 100 and the S&P 500 are headed for weekly gains of 1.5% and 0.6%, respectively. The Dow Jones fell over 0.64% this week. The NASDAQ 100 index made fresh record highs this week, shrugging off the worries of elevated interest rates and borrowing costs. Shares of AMD (+29%), Intel Corporation (+21.6%), Meta Platforms (+13.9%), Micron Technology (+13.2%), and SanDisk Corporation (+12%) were among the top gainers from the NASDAQ 100 index this week.

Meanwhile, shares of Finance and consumer-focused companies like JPMorgan Chase & Co (-3.8%), American Express (-3.3%), McDonald's Corporation (-5.3%), and Home Depot (-4.8%) were among the key drags on the Dow Jone index this week.