New Delhi, May 5 -- Stocks surged to new highs last week, fully erasing losses caused by the U.S.-Iran war, but the bond market could spoil the party.

The S&P 500, a benchmark for U.S. market performance, finished Friday's sessions at a record level and was up about 5% from its pre-conflict level through Friday. In contrast, the Treasury market, evidenced by the Bloomberg Treasury Index, was down 1.7% compared with pre-conflict levels.

The Treasury market is at a critical juncture and deepening losses at this point could pull money away from stocks as prices fall and yields rise.

How? Look at the popular iShares 20+ Year Treasury Bond ETF. At the current price of $84.80, the long-term Treasury fund is approaching $83.30, its lowest poi...