A 50-60 basis-point increase in the 10-year Treasury yield could shift investor preference from stocks to bonds, strategists warn.
A further 50-60 basis-point rise in the U.S. 10-year Treasury yield could make bonds more attractive relative to equities, according to strategists. Stocks have outperformed bonds for four consecutive years, but higher yields may alter this dynamic.
The 10-year Treasury yield currently stands near multi-year highs, reflecting expectations of sustained higher interest rates. Historically, rising yields have pressured equity valuations, particularly for growth stocks.
Strategists suggest that if yields breach this threshold, investors may reallocate capital from equities to fixed income, seeking better risk-adjusted returns.