Stocks keep shrugging off rising Treasury yields. Here’s the level that could finally trigger a selloff.

As the 10-year Treasury yield continues its upward climb, equities have shown a surprising resilience. Typically, rising yields are a headwind for stocks, as they increase borrowing costs and reduce the present value of future earnings—a dynamic that puts particular pressure on growth and technology stocks. Yet, the market's recent behavior suggests investors are prioritizing a stronger earnings outlook over rate concerns.

According to a call of the day from Strategas, this patience has a limit. The firm argues that the current yield level is still far from the point where it genuinely starts to threaten equity valuations. Their analysis points to a much higher threshold—suggesting the economy and corporate profits can absorb the current rate environment. In other words, the stock market's indifference is rational, not complacent, as long as yields remain below that critical zone.

For market participants, the key is to monitor how close yields get to that identified level. If the 10-year approaches that threshold, expect a more pronounced selloff and a shift in leadership away from rate-sensitive sectors. Until then, the prevailing logic may hold: strong fundamentals can outweigh a gradually higher discount rate. The focus should remain on the data that drives both yields and earnings, rather than the daily noise.