We’ve seen this before. An early rally evaporates, stealing the momentum major benchmarks needed to push through the previous day’s high and get back to work wiping out their bear market losses.

It’s not that there’s a new fear factor making investors dump the stocks they held yesterday. At this point, we’re all bracing for another 0.50 percentage point interest rate hike next week . . . except for those few ultra hawks who think the Fed will drop a 0.75 point bomb on Wall Street.

And in the months to come, the rate ladder looks as steep as it did a week ago. In the coming year, futures markets suggest that it will come as a shock if the Fed doesn’t raise the short end of the yield curve at least another 2 percentage points beyond next week’s meeting.

We know all of that. It’s priced into the market. High-multiple stocks have already come down to more forgiving valuations consistent with a non-zero-rate world.

Unless we get a major inflation shock on Friday, additional bad news on that front is unlikely. However, we need a little good news to push stocks much higher . . . and that’s unlikely until earnings season gets going later this month.

Of course, investors can always reconsider their choices and decide they’re willing to pay up for world-class companies after all, despite the Fed and all its works. For that to happen, we need a little defiance.

We need to see stocks rally even if 10-year Treasury yields stay here around 3% or even nudge a little beyond that historical pain point. That’s a harder proposition than it appears.

The last time the big bond paid above 2.8% for an extended period of time was the first few weeks of May. During that time, stocks had trouble making any headway . . . in fact, the S&P 500 dropped about 4% as the end of the last earnings cycle turned sour for Big Retail.

As stocks went down, nervous money trickled back to the bond market and yields receded a little, taking the pressure off. Stocks found the strength to recover. But now, with yields back at a post-COVID high, stocks seem to have peaked as well.

Where it gets interesting is what happens with the Fed. Next week will almost undoubtedly reset short-term Treasury yields in line with higher overnight rates. We’ll probably see 1-month paper start paying closer to 1.40% than the current 0.88%.

Longer-dated yields then feel the pull. If they stay where they are, it’s a clear recession signal. I suspect they’ll take their cue from the Fed instead.

But by the time you get six months out on the yield curve, the pressure evaporates. Yields are already high enough here to factor in a couple of big rate hikes without needing to move much in the next few months.

And unless the Fed needs to get extremely aggressive, the long end of the curve doesn’t need to move much at all. Maybe it will. We’ll just have to see what happens if 10-year bonds start paying a lot more than 3%.

On the other hand, maybe they won’t. Even before the COVID crash, Jay Powell . . . the same Jay Powell who runs the Fed now . . . only let 10-year yields edge a little beyond 3% before the 2018 market downturn changed his focus. Yields were back below 2.7% by the end of that year and stocks got a lot more room to rally.

Back then, inflation was considered a myth. The Fed can’t let itself be so merciful this time around. But back then, we were also embroiled in a global trade war. Russian oil falling off the free world’s radar is a pretty good substitute for that particular fear factor.

Four years ago, the trade war took a big bite out of U.S. companies’ overseas sales. (I’m looking at you, Apple (AAPL).) Now, Russia’s war is taking a similar bite out of corporate profit margins and ultimately global consumers’ wallets.

We got through that one. The Fed will figure out how to force inflation down to 2-4% and, if the job market freezes over, declare short-term victory. Prices won’t go down. Supply chains won’t bounce back overnight. But 2018 taught us all that the Fed actually pays attention.

I hope we don’t need a refresher course. If we do, long-term interest rates aren’t likely to climb much higher. I only wish stocks would climb the existing wall of worry a little faster.