What do surging bond yields mean for your finances?

Bond yields have surged worldwide, threatening to lift mortgage rates and credit card payments for hundreds of millions of people. The U.S. is no exception.

The yield on a 10-year Treasury bond, or the amount paid to a bondholder annually, stands at about 4.8%, marking about half a percentage-point jump over the past month. That figure marks the highest yield for 10-year Treasury bonds in 14 months.

Yields spiked in recent days after a stronger-than-expected jobs report last week gave the Federal Reserve reason to delay interest rate cuts forecast for later this year.

The news came after a monthslong stretch of stubborn inflation had already dampened hopes of a rate cut early in 2025.

The rise in bond yields may hammer borrowers, but larger annual payments from low-risk treasuries could offset some of that pain, analysts said. Higher yields, they added, could make it more difficult for the stock market to sustain gains from previous years, but the exact effect remains uncertain.

"The rising rates on bonds will certainly impact everybody," Adam Lampe, CEO of Mint Wealth Management, told ABC News.

Here's what the increased bond yields mean for your finances, according to experts:

'Benefits savers and punishes borrowers'

The downside of rising bond yields is clear, experts said: borrowing costs go up.

Long-term Treasury yields help set interest payments for mortgages, credit cards, car loans and just about any other type of borrowing, Dominic Pappalardo, chief multi-asset strategist at Morningstar Investment Management, told ABC News.

This financial pain is exemplified by the housing market, where the average interest rate for a 30-year fixed mortgage has climbed to 6.93%, Freddie Mac data shows. In September, that average rate hovered just above 6%.

"Anybody who has to borrow money will have to pay higher interest rates, therefore increasing their costs," Pappalardo said.

The impact of bond yields on consumers isn't entirely negative, however.

The trend means better returns for investors who place their money into financial instruments such as money market funds or high-interest savings accounts, which are safer investments than the stock market.

The average yield for a money market fund -- a batch of investments in low-risk government and corporate debt -- stands at 4.27%, according to Vanguard. That rate well exceeds the current year-over-year inflation rate of 2.7%, meaning a money market fund offers an opportunity for returns even when accounting for inflation, experts said.

"For those who want to see their money go up faster than the inflation rate, you can do it now with almost no risk," Jim Bianco, a market analyst at Bianco Research, told ABC News.

In other words, the rise in bond yields portends good days to come for those with money to save and bad ones for those in need of a loan.

"High interest rates benefit savers and punish borrowers," Pappalardo said.

Risk for the stock market

The rise in bond yields could also prove a warning sign for the stock market, experts said.

Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain above the target rate of 2%. The inflation rate has ticked up in recent months.

Traders anticipate higher interest rates for a longer period, suggesting expectations of a more prolonged bout of inflation than previously thought just a few months ago.

If that worry comes to pass, the central bank would need to keep borrowing costs high, which could place downward pressure on economic activity and weaken corporate profits.

"Equities don't look as attractive in a higher-interest-rate environment," said Lampe, of Mint Wealth.

The stock market climbed to record highs in 2024, extending banner gains achieved the previous year. The S&P 500 -- the index to which many people's 401(k)s are pegged -- soared 25% last year.

The market may be due for a cooldown in 2025, Bianco said. "You'll get more moderate types of returns," he added.

Still, stock performance may defy expectations, as it did in previous years when many analysts expected an economic downturn, some experts said.

Inflation may come under control sooner than expected, or initiatives put forward by President-elect Donald Trump could accelerate economic growth, even in the face of high interest rates.

The possibility of breakneck growth presents its own risk, however, since a booming economy would likely bring a burst of consumer demand and further price increases, Bianco said.

The thorny outlook for the stock market may bolster investor appetite for bonds, he added.

"Bond funds will return you most of what the stock market will return you, but with less risk," Bianco said.