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Danger Lurks in Global Markets Transfixed by Rising Bond Yields

  • Growth break-out would pose duration risk for stocks and bonds
  • Tech firms with long-horizon cash flows are among most exposed
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Stock Market May Plunge 15%, Aperture's Kraus Warns

Just as an everything rally propels records in the S&P 500 and inflates risk assets, the bond market is emitting a warning signal to investors that a rapid economic rebound comes with its own dangers.

Treasury yields have jumped to the highest since the early days of the pandemic as the vaccine rollout and potential for another massive U.S. stimulus package revive animal spirits and the prospect of inflation. But years of near-zero rates and a historic debt overhang have left both stocks and bonds uniquely vulnerable to deep losses if yields climb too far on a growth break-out.