As Yields Break Records, Tom Lee Sees an Upside, But Only for the Strongest

Fundstrat’s Tom Lee argues the market is studying rising Treasury yields the improper means, framing them as a inventory market menace when they might really be sorting sturdy firms from weak ones.

Lee joined the panel already mid-debate, introduced in particularly to react to 2 friends who had simply clashed over whether or not surging yields spell hassle for shares. Rather than facet with both camp, he reframed the query, arguing the actual situation isn’t whether or not yields are climbing, however which firms can continue to grow whereas they do.

Yields as a Filter, Not a Flat Tax

The 10-year Treasury yield touched 5.04% on September 15, and the 30-year Treasury yield hits highest stage since 2004, its highest stage since 2007, days after the Federal Reserve delivered its first price hike since 2023, lifting its goal vary to three.75%-4.00%.

Appearing on CNBC’s Closing Bell, Lee pushed again on the concept {that a} transfer like that is unambiguously unhealthy information, arguing the market remains to be understanding whether or not it marks a real shift or a one-off adjustment, a debate that barely dented crypto prices in the days after the choice.

Higher borrowing prices, Lee argued, don’t squeeze each firm the identical means. Well-capitalized corporations maintain easy accessibility to financing whereas smaller, weaker rivals wrestle to compete, widening the hole between them.

That dynamic, he stated, helps clarify the resilience of mega-cap tech shares whilst yields have climbed, since their financing edge solely grows extra invaluable as situations tighten for everybody else.

A Disinflation Case Lee Says Is Underpriced

Lee’s optimism extends to inflation. He expects headline and core readings to fall meaningfully over the subsequent six months as tariff results fade, the current AI-driven leap in memory-chip costs cools, and oil holds close to $100 a barrel.

He additionally flagged a technical catalyst, the Bureau of Economic Analysis’s September 30 methodology revision to the Personal Consumption Expenditures index, which he estimated may shave 20 to 40 foundation factors off the annual price.

Independent estimates from TD Securities and Wells Fargo put the impact nearer to 15-20 foundation factors, extra modest however directionally supportive of his case.

Host Scott Wapner pressed Lee on what occurs if yields and inflation keep elevated longer than his six-month window.

Lee acknowledged the uncertainty however stated the steadiness of proof nonetheless favors an actual slowdown in value progress, a shift that might matter for crypto as a lot as shares given how intently each have tracked the path of actual yields this yr.

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