Although equities grabbed all the headlines on their way to a ninth consecutive weekly advance, US Treasurys put in a decent showing during Memorial Day week as well. And not a moment too soon.
On May 19, benchmark US borrowing costs flirted with 4.70%, the highest since Donald Trump took office for a second time. That same day, the yield on the long bond breached the 5.176% peak from 2023 on its way to the highest since 2007.
That’s not what you want if you’re Scott Bessent, nor if you’re Trump, who undermined (severely) a late-2025 pivot to domestic affordability concerns by launching a war which pushed up oil prices with knock-on effects for Treasury yields and mortgage rates.
As the figure shows, this was the second straight week during which the S&P and the US long-end rallied in tandem. As for 10-year yields, they closed the week at 4.45%, the lowest since May 11.
From here, a lot (everything) hangs on Trump’s “final determination” on a ceasefire extension with Iran and, more to the point, whether the Strait’s reopened in conjunction with an agreement.
For most of the war, bonds yields were a function of oil prices, and with equities historically expensive relative to bonds, higher yields are a dicey proposition the further the stock rally runs.
With that in mind, consider the figure below from JPMorgan, whose Fabio Bassi looked at “convexity optimism” in big-cap US tech. 
Specifically, the bank quantified the extent to which “risk-on reactions to positive headlines and falling Brent prices are larger in magnitude than risk-off reactions to negative headlines and rising Brent prices.” As you can see, the phenomenon is quite real and quite pronounced.
“Convexity is more visible and statistical fits are materially stronger amid downside oil moves in comparison to upside ones since the start of the conflict,” Bassi wrote, adding that the asymmetry “underpins” the market’s “buy the winners” narrative, reinforcing investors’ inclination to “lean into the assets that have demonstrated the strongest positive convexity to good-news catalysts.”
Again, Treasury yields are in large part beholden to oil as long as the conflict persists, and stocks are at or near their most expensive levels versus Treasurys since the dot-com boom.
So, if Trump’s interested in extending what’s already one of the longest weekly win streaks for US equities on record, he’d do well to sign a peace agreement.
Trump surely doesn’t know this, and I doubt Bessent does either (although, as Treasury chief, he should), but the summer seasonal’s kind to bonds all else equal.
The figure above, from BMO’s Ian Lyngen, encapsulates 35 years of history for 10s and the long bond from June through August.
On average, 10-year yields fall 18bps over the three summer months and 30-year yields 16bps, with the vast majority of the move(s) concentrated in August.
“It goes without saying that geopolitical developments and the traditional macro fundamentals will take precedence over any influence of the seasonals on the direction of US rates,” Lyngen remarked, in his weekly.
“Still,” he went on, “the bond-bullish seasonality during the next phase of the year is something we’re keeping in mind as the market continues to contemplate the extent to which nominal rates will be able to push beyond the local extremes even if oil collapses on the announcement of a US-Iran peace deal.”
