U.S. Treasury yields are like the thermometer of the global financial markets—once they fluctuate, a chain reaction immediately follows.

On the first day of trading in 2026, the 30-year U.S. Treasury yield surged to 4.88%, and the 10-year jumped to 4.19%. The numbers may not seem large, but the impact on the market is real. Not only the bond market is stirred, but also the stock market, exchange rates, commodities, and emerging market assets are all affected.

Let's start with the stock market. What does rising risk-free rates mean? It directly increases corporate financing costs, making stocks less attractive. This is especially painful for high-valuation sectors like tech stocks and growth stocks, as they are most sensitive to interest rate changes. Valuations might be cut. But from another perspective, if the market still believes in the story of economic growth, stocks may not plummet in the short term; instead, we could see structural differentiation—some investors profit while others lose.

On the currency front, there's an interesting twist. Logically, rising U.S. Treasury yields should attract global capital inflows into the U.S., causing the dollar to appreciate. But where's the problem? The U.S. debt has already exceeded $36 trillion, accounting for over 120% of GDP. Such a heavy debt burden makes the market start to worry about the U.S. fiscal situation, and the dollar's creditworthiness is quietly weakening. As a result, the positive effect of rising Treasury yields is offset by debt concerns, and non-U.S. currencies like the RMB might actually find support.

For emerging markets, rising U.S. Treasury yields are usually bad news—capital outflow pressures increase. Some emerging market countries with already unstable economic fundamentals and frequent exchange rate fluctuations may face even greater shocks.