The bond market is flashing warning signs, and JPMorgan wants equity investors to pay attention. Grace Peters, co-head of global investment strategy at JPMorgan Private Bank, told Bloomberg Television that bond yields climbing into the 5% to 5.25% range pose a meaningful risk to stock valuations heading into what is historically one of the roughest months for fixed-income markets.
Her warning lands at a moment when yields across the globe are surging to levels that haven’t been seen in years, or in some cases, decades. The US 10-year Treasury yield has climbed to roughly 4.8%, its highest mark in nearly three years, while Japan’s 10-year government bond yield has blown past 3% for the first time since 1996. UK 30-year gilts, meanwhile, have reached levels not seen since 1998.
A wall of worry that keeps getting taller
Peters described the current environment using a familiar market metaphor: investors are climbing a “wall of worry.” The catalyst behind this bond selloff is a cocktail of forces that have been simmering for months. Persistent inflation remains stubbornly above central bank targets in several major economies. Escalating oil prices, driven in part by geopolitical tensions, are adding fuel to the inflationary fire. And a broader reassessment of where central bank interest rates are heading has forced fixed-income markets to reprice aggressively.
