Summertime and the livin' is easy, as the Gershwin classic goes. Not if you're a bond trader.

The U.S. Treasury market, alongside government bond systems from major economies around the world, has been in a long summer funk that could threaten the recent rally in stocks, cause havoc with the autumn election cycle, and dump added pressure on a Federal Reserve determined to ignore any signals beyond the real economy.

The selloff, which began in late June following the inaugural press conference of Fed Chairman Kevin Warsh, has added around 30 basis points to 10-year note yields, perhaps the most important-market traded interest rate product on the planet, and lifted 30-year bond yields to the highest levels since 2007.

A sale of new long-dated bonds on Thursday, in fact, drew the highest bidding yields since 2001.

Those moves, curiously, have come amid modestly improving inflation data, readings on the job market that suggest nascent weakness that could snuff out bets for Fed rate hike, and a steady stream of economic data that suggests a growth rate strong enough to avoid recession but not so powerful as to stoke renewed price pressures.

All of which should be bullish for bonds. But it hasn't been.

Wall Street's conscience-in-residence, JPMorgan CEO Jamie Dimon, highlighted the issues last month.

"I don't understand what the upside is" in longer-dated U.S. bonds, he told Wilfred Frost's Master Investor Podcast, noting that debt and deficit figures are hitting startling levels even as the economy, and broader equity markets, continue to outperform.

"[Usually] you have to have a 'Great recession' or a depression or war to have numbers like that...And so my view is it will become a problem," he said.

It might be already.

Data released earlier this week indicated a U.S. budget deficit of $1.8 trillion over the 10 months ended in July, a level that topped last year's overall total with two more months left on the 2026 fiscal calendar.

The deficit tally last month, at $432 billion, was the highest since March 2021, and bested only by two other pandemic-era readings in June and April 2020.

Overall U.S. debt levels are likely to reach the $40 trillion mark, the highest on record, within the next two months. A staggering $50 trillion tally is firmly in the frame by the end of the decade, as well, according to the Congressional Budget Office.

That's a worrying backdrop to what James Smith, developed markets economist at ING, describes as the new reality for bond investors: "a global economy that's trapped in a cycle of recurring supply shocks that keep inflation permanently above target."

Those shocks, including the massive surge in semiconductor costs, the power demand linked to rollout of AI-powered data centers, and the spikes in global crude prices tied to the U.S. war with Iran, are all evident in the current market mindset.

"That thinking is hugely problematic for investors," he added. "If supply shocks really are becoming more frequent -- and we get more periods where inflation rises at the expense of economic growth -- then we'll see more periods where bond and stock prices fall together."

At present, however, that's not the case.

Stocks have been flying off the shelves this month, with the S&P 500 rising more than 4.1% to a fresh record high of 7795 points, a level that is just 2.5% from the bolder Wall Street forecasts of 8000 points by the end of the year.

The tech-focused Nasdaq Composite hasn't reclaimed its early June peak, but has gained more than 5.6% since the end of last month, powered in part by a 3.5% advance for an index of the so-called Magnificent Seven.

But the risks to stock performance from an angry bond market can't be ignored.

Benchmark 10-year notes yields could test the 5% level sometime this autumn, particularly if the conflict in the Gulf stokes oil and inflation pressures and the Fed sticks to Warsh's policy of communications omerta.

That test could come as soon as September, in fact, when the Fed wraps up its autumn policy gathering, and publishes fresh growth, inflation and job market forecasts, with an eye to pressures expected to develop over the coming year.

At present, markets are only pegging at 35% a chance of a rate hike, a level that is notably lower than the 65% high it reached in late July -- but still elevated enough to keep markets on edge.

That's expressed, at least in part, by 2-year note yields, which have fallen nearly 20 basis points since late July, but at 4.135% are still nearly 50 basis points north of the Fed's current base rate of 3.5% to 3.75%.

"A rise in yields driven by economic growth is fine for stocks, but elevated yields caused by inflation worries can reach a threshold that spills into selling pressure," said Jeff Buchbinder, chief equity strategist at LPL Financial. "Especially when the rise in rates is rapid as we've seen this summer."

"Our technical analysis work suggests a breakout higher [in Treasury yields] cannot be ruled out, nor can the possibility that positive economic surprises spur Fed rate hikes," he added.

So pity the bond trader as you enjoy your final weeks of summer, riding the solid stock market gains and toasting the broader economic resilience that is likely to extend well into the end of the year.

But ignore him or her at your peril.