Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeInvestorBond yields are 'elephant in room' stock investors are ignoringWhile Wall Street strategists are watching the rise in global yields with some concern, they remain bullish on equitiesAuthor of the article:Last updated 14 minutes ago A “disorderly rise in bond yields” is considered the second-largest threat to the equity market after concerns about an artificial intelligence bubble. Photo by Michael Nagle/BloombergIf professional investors are worried that the rise in global bond yields will derail a bull market in stocks, you’d never guess it by looking at what they’re doing with the money they manage.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorGlobal fund managers have 56 per cent of their portfolios in equities, the highest proportion since November 2021, according to Bank of America Corp.’s latest survey. The bullishness toward stocks comes even as the same survey shows that a “disorderly rise in bond yields” is considered the second-largest threat to the equity market after concerns about an artificial intelligence bubble. In a related risk, 25 per cent of respondents cited a second wave of inflation as the largest risk.The jump in yields is the “elephant in the room” that threatens to derail an equity market that has had trouble staying near records after hitting them over the past year, Tyler Richey, editor of the Sevens Report Technicals newsletter, said by phone.Canada's best source for investing news, analysis and insight.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Investor will soon be in your inbox.We encountered an issue signing you up. Please try againYet while strategists up and down Wall Street are watching the rise in yields with some concern, they are for the most part concluding that they haven’t climbed high enough to derail the bull case for stocks. After all, history shows that sudden spikes in yields aren’t always poison for the stock market.“You should be bullish, or at least opportunistic here,” JC O’Hara, chief technical strategist at Roth Capital Partners LLC, said of the stock market sitting near record highs despite climbing yields. Risk appetites are improving on a combination of “stronger earnings expectations, better economic outlooks, and a lighter focus on Middle East tensions,” he said, adding that forward returns for the S&P 500 tend to be strong when risk appetite is improving.For those who are concerned about the rise in yields, Wednesday offered some relief after the United States Treasury unexpectedly said it would ramp up buybacks of long-dated government debt in a move that sent the 10-year yield down six basis points to 4.65 per cent. The 30-year yield, which earlier this week returned to the highest since 2007, slid nine basis points to 5.19 per cent. Rates on both were creeping back up early Thursday, however.For other stock-market analysts, it’s the yield curve — or the difference between rates on short-term and long-term Treasuries — that’s worth watching. And the equity market is currently enjoying the “sweet spot” of the curve, Ed Clissold, chief U.S. strategist at Ned Davis Research, wrote in a note to clients on Tuesday. Currently, 10-year yields are about 49 basis points higher than two-year yields.Clissold described a “modestly upward sloping yield curve,” in which the 10-year is as much 1.5 percentage points higher than the two-year, as providing some of the largest and most consistent gains for the S&P 500. In that range, the S&P 500 provides an average annual return of roughly 11 per cent, according to an NDR analysis going back to 1976.Of course, even current stock-market bulls concede that there is a point when rates may potentially start to bite the stock market if they keep rising.“We’re OK around here, I think a move closer to five per cent probably is the thing that would rattle the market, akin to what happened in 2023,” Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, said in a Bloomberg TV interview. The S&P 500 sank 10 per cent from the end of July to late October that year amid a surge in the 10-year yield that made it briefly touch five per cent.Or as Matt Maley, chief market strategist at Miller Tabak + Co., said by phone: “Bond yields start to move higher and the equity market ignores it — until it doesn’t.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.