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Jim Cramer warns that rising long-term bond yields and stubborn inflation are creating significant pressure on the stock market.

Jim Cramer noted that investors can no longer ignore the bond market as stubborn inflation and a surge in corporate borrowing for artificial intelligence projects are keeping long-term interest rates elevated. The 10-year Treasury yield has climbed toward 4.7%, while the 30-year yield has reached its highest level in nearly two decades. These rising yields provide tougher competition for investor dollars, potentially reducing the present value of future profits and pressuring the S&P 500. While the stock market has shown resilience due to strong corporate earnings, the steady rise in yields creates a more complicated outlook. The administration announced a plan to double the size of planned buybacks of longer-dated government debt to address the issue, though Cramer suggests that the only real solution lies in cutting spending or raising revenue. Ultimately, the impact on stocks depends on the how fast and how far yields continue to rise, with the 5% mark on the 10-year yield serving as a key psychological threshold for investors.

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