Not All Yield Rises Are Equal For Equities

The report examines the impact of rising UST yields on equity markets, arguing that drivers like real yields and market risk sentiment are more critical than the yield rise magnitude itself. It warns that current conditions may be unfavorable for equities due to potential fiscal-driven real yield spikes.

Key Takeaways

• 1.The impact of rising US Treasury yields on equities depends primarily on the driver of the move rather than the rise itself.
• 2.Rising real yields driven by government borrowing pose a significant risk to equities, particularly in risk-off environments.
• 3.Market sensitivity to real yields has likely increased due to the dominance of hyperscalers in the S&P 500, which rely on long-duration cash flows.

Table of Contents

• Not all yield rises are equal for equities
• ARE HIGHER UST YIELDS BAD FOR EQUITIES?
• THE CONTEXT
• THE DATA
• OUR VIEW
• OTHER THINGS TO NOTE
• TODAY'S DATA RELEASES
• Legal Notices

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