As Yields Break Records, Tom Lee Sees an Upside, But Only for the Strongest

Fundstrat’s Tom Lee argues the market is reading rising Treasury yields the wrong way, framing them as a stock market threat when they may actually be sorting strong companies from weak ones.

Lee joined the panel already mid-debate, brought in specifically to react to two guests who had just clashed over whether surging yields spell trouble for stocks. Rather than side with either camp, he reframed the question, arguing the real issue isn’t whether yields are climbing, but which companies can keep growing while they do.

Yields as a Filter, Not a Flat Tax

The 10-year Treasury yield touched 5.04% on September 15, and the 30-year Treasury yield hits highest level since 2004, its highest level since 2007, days after the Federal Reserve delivered its first rate hike since 2023, lifting its target range to 3.75%-4.00%.

Appearing on CNBC’s Closing Bell, Lee pushed back on the idea that a move like this is unambiguously bad news, arguing the market is still working out whether it marks a genuine shift or a one-off adjustment, a debate that barely dented crypto prices in the days after the decision.

Higher borrowing costs, Lee argued, do not squeeze every company the same way. Well-capitalized firms keep easy access to financing while smaller, weaker rivals struggle to compete, widening the gap between them.

That dynamic, he said, helps explain the resilience of mega-cap tech stocks even as yields have climbed, since their financing edge only grows more valuable as conditions tighten for everyone else.

A Disinflation Case Lee Says Is Underpriced

Lee’s optimism extends to inflation. He expects headline and core readings to fall meaningfully over the next six months as tariff effects fade, the recent AI-driven jump in memory-chip prices cools, and oil holds near $100 a barrel.

He also flagged a technical catalyst, the Bureau of Economic Analysis’s September 30 methodology revision to the Personal Consumption Expenditures index, which he estimated could shave 20 to 40 basis points off the annual rate.

Independent estimates from TD Securities and Wells Fargo put the effect closer to 15-20 basis points, more modest but directionally supportive of his case.

Host Scott Wapner pressed Lee on what happens if yields and inflation stay elevated longer than his six-month window.

Lee acknowledged the uncertainty but said the balance of evidence still favors a real slowdown in price growth, a shift that would matter for crypto as much as stocks given how closely both have tracked the path of real yields this year.