The 10-Year Treasury yield has surged 85% since the beginning of the year. This benchmark yield broke through pre-pandemic levels today, illustrating increased optimism about economic recovery.

The Federal Reserve has maintained its extremely dovish stance about keeping short-term rates at the current record lows. The markets are telegraphing to Jerome Powell that his dovish narrative needs to be shifted.

The markets are pricing in a potential taper tantrum. The Fed’s first move towards a more hawkish narrative would be to announce a decrease in its balance sheet value (aka taper tantrum).

The implications of this yield move are positive for value stocks but deflating some of the most stretched tech valuations.

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