Wall Street: Bond yields climb to 1-year high of 1.36%. Risk ahead?

It’s a common question these days: Is the economy on the road to recovery?

There has been a rise in Treasury yields in the US stock market. An all-time high of 1.36 percent was achieved this week by Treasury’s benchmark 10-year yield.

Progress in the US vaccination program and additional fiscal stimulus were cited as factors in this rise in confidence.

Despite this, some investors are concerned that a sustained rise in the stock market could be more dangerous.

All asset prices are expected to fall when interest rates rise, according to Eric Freedman, chief investment officer at US Bank Wealth Management.

According to Freedman, yields have yet to rise to the point where they are a viable alternative to stocks.

At this point in the fourth-quarter earnings season, the S&P 500 is hovering near all-time highs, with companies reporting earnings 17.2% above expectations, according to Refinitiv data.

There are a number of signs that the ultra-easy monetary policy and fiscal stimulus have fuelled an excessive appetite for risk that could be curbed if the yields start to rise, including blistering rallies in Bitcoin and Tesla shares and the proliferation of special purpose acquisition companies (SPACs).

In the meantime, investors are upbeat about the move, noting that yields appear to be rising as expectations of an improved economy..


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