Investing.com -- Rising U.S. Treasury yields are unsettling markets, but Yardeni Research says investors should not panic, arguing that the bond selloff reflects economic resilience rather than a systemic threat to the bull market.

In a note, Yardeni highlighted that the 30-year yield hit 5.19%, its highest since July 2007, while the 10-year yield surged to 4.69%, its highest since January 2025.

The firm attributed the move to last week's hotter-than-expected April producer price index reading and a run of stronger-than-expected economic data.

Despite the speed of the yield rise, Yardeni pushed back on recession fears, arguing that current levels reflect "a resilient economy with a short-term inflation problem" rather than stagflation.

The firm said the Federal Reserve should respond by raising the federal funds rate within the next two months.

Yardeni’s "current assessment is that the bull market isn't at risk of being derailed by the sell-off in the bond market, which presents a very good opportunity to buy both bonds and stocks."

Supporting that view, the firm pointed to a Redbook same-store retail sales index reading of 8.9% year-on-year for the week ending May 16, private payroll growth averaging 42,250 jobs per week through early May, and a Citigroup Economic Surprise Index that has remained strong.

Yardeni maintained its S&P 500 year-end target of 8,250, adding that it will "start to worry if the 10-year yield significantly breaches 5.00%."