Many people shout 'collapse' when they see the US Treasury break through its high levels, it's over! But I don't understand the true logic behind it, as well as the correlation and timing between high and collapse! Today I'm here to explain it clearly to everyone. Don't be too long, you'll understand after reading it! The 30-year US Treasury yield has reached a 19 year high, which does not mean that the US stock market will collapse tomorrow, but it means that the "chronic bomb" of high interest rates has begun to count: In history, the stock market often managed to hold on for 3-6 months, and the real risks erupted after high interest rates were transmitted to the credit market. At present, the yield of 30-year US Treasury bonds has risen to about 5.27%, returning to the highest level since 2007. This rise reflects not only whether the Federal Reserve will continue to raise interest rates, but also that the market has begun to worry about the long-term inflation, fiscal deficit, treasury bond supply and the credibility of monetary policy in the United States. Investors are willing to lend money to the United States for 30 years, but demand a return of over 5%, indicating that global funds are re pricing dollar assets. This has three main impacts on the stock market. Firstly, if the risk-free rate of return exceeds 5%, it will directly compress the stock valuation. The fund will be recalculated: why buy a company's forward profit at a high price since you can get a stable return by buying treasury bond? Therefore, AI, technology, and growth stocks with higher valuations and farther profit realization are more sensitive to interest rates. Secondly, the yield of long-term bonds will be transmitted to housing loans, corporate bonds, and merger and acquisition financing. The increase in financing costs and the decrease in repurchase ability of enterprises will also squeeze profit margins. The market may initially only 'kill valuation', but if high interest rates persist for too long, it will eventually enter a 'kill profit' phase. Thirdly, the US government itself will also be backfired by high interest rates. The more debt, the higher the interest expenses; The greater the fiscal pressure, the higher the risk compensation required by the market, which can easily form a cycle of "increased bond issuance - rising yields - heavier interest burden". History is more worthy of vigilance. From June to July 2007, the yield on 30-year US Treasury bonds also rose above 5%, but the US stock market did not immediately collapse. The S&P 500 continued to rise for about three months until it peaked in October; The real systemic collapse occurred in September 2008, about 14-15 months after the yield of long-term bonds broke through its high level. High interest rates are not the direct cause of the financial crisis, they simply continue to squeeze the real estate and credit markets, ultimately puncturing the already existing high leverage. In 2018, after the 10-year US Treasury yield broke through 3%, the US stock market continued to rise for about 5 months. It was not until the simultaneous occurrence of high interest rates, balance sheet tightening, and downward revision of profit expectations that the S&P 500 rapidly declined by nearly 20% in the fourth quarter. In 2022, the transmission will be faster. Uncontrolled inflation, aggressive interest rate hikes by the Federal Reserve, and soaring yields occurred simultaneously, causing the S&P 500 to fall 19.4% for the whole year, Nasdaq to plummet 33%, and overvalued growth stocks to become the hardest hit areas. So, after bond yields break through high levels, there is no fixed "countdown to collapse" for the US stock market. Historical experience can only indicate that the next 3-6 months typically enter a high-risk window for valuation and volatility; If the yield stays above 5% for several months, the probability of credit accidents, profit revisions, or liquidity shocks occurring within 6-18 months will significantly increase. The difference between this round and 2007 is that the banking system has not yet exposed bad debts of the same level, and technology giants have stronger cash flows; But the similarities are that the market valuation is high, the fiscal leverage is huge, and the funds are highly concentrated in a few AI leaders. As long as core companies such as Microsoft, Amazon, and Nvidia can still cover interest rate pressures with profit growth, the US stock market may continue to maintain a "strong index, weak individual stocks" structure. But if long-term bond yields continue to hit 5.5% or even 6%, or if high-yield bond spreads rapidly widen, strong financial reports will also be difficult to offset valuation compression in the long term. What really needs to be monitored next is not just a certain point in the 30-year US Treasury bond, but three signals: Has the interest spread on high-yield bonds suddenly widened; Whether banks, commercial real estate, or private equity loans have started to explode; Is the profit growth rate of technology leaders lower than the rate of rising capital costs. The record high yield of US Treasury bonds is not about pressing the stock market crash button, but about initiating stress tests; In history, US stocks usually hold on for a few months, waiting for high interest rates to spread to the credit market before the real risks show their teeth.