And Friday’s session did indeed see the yield on the 10-year note briefly trade above 4.5% before appearing to attract buyers, leaving it to end the day near 4.46%.

Adam contends yields won’t be a lasting problem for stocks “as long as the upward trajectory for earnings remains intact and the economy achieves a soft landing.”

But stock-market investors may remain at the mercy of moves in the bond market in the near term, said Ian Lyngen and Vail Hartman, rates strategists at BMO Capital Markets, in a note.

“The feedback loop between higher Treasury yields and wobbles in the equity market will take center stage during the next few sessions. If for no other reason, the lack of any top-tier data will leave investor sentiment vulnerable to swings in other asset classes,” they wrote.

The outlook for yields, in turn, depends on what investors ultimately make of Trump’s plans. Analysts have debated how much of the yield rise since late September are explained by fears of reflationary Trump policies, including import tariffs, tax cuts and continued government deficit spending.

Powell has reiterated that policymakers don’t make assumptions about fiscal policy and other measures, but Fed watchers and rates strategists wonder if uncertainty over the Trump agenda has contributed to the Fed’s desire to create more options in terms of the pace and scope of further rate cuts.

Fed officials “will already be thinking about potential reflationary shocks, market inflation break-evens, shifting financial conditions, and reduced visibility into 2025,” said Krishna Guha, head of the global policy and central bank strategy team at Evercore ISI, in a Friday note.

“We think this makes them more sensitive to upside surprises in the spot inflation data, while also loading onto ‘data-dependence’ Trump-related concerns they cannot speak openly about,” he wrote.

That’s still in keeping with another quarter-percentage-point Fed rate cut in December, he said, slowing to one quarter-point cut per quarter in 2025. The path remains for the fed funds rate to fall toward 4%, but the timing and scope of cuts is more uncertain. And that should serve to crimp investor appetite for risky assets at the margin.

“Even in our base case the Fed will prize optionality as a hedge against Trump uncertainty,” Guha wrote. “When the Fed is long an option, risk-takers are short the same option, so this is less risk-friendly, even if the baseline is not as hawkish as some fear.”