economy
U.S. Treasurys are now firmly in the 'danger zone,' strategists say
U.S. Treasurys are in a "danger zone" as surging long-term yields raise fears that sticky inflation could begin spilling over into equities, strategists said.
TL;DR
- U.S. Treasurys are in a 'danger zone' due to surging long-term yields.
- Sticky inflation and hawkish rate expectations may spill over into equities and risk assets.
- The 30-year Treasury yield exceeded 5.19%, highest since 2007; 10-year yield approached 4.69%.
- HSBC warns further repricing could drive yields higher, causing risk assets to decline.
- Market resilience is attributed to strong corporate earnings and prior valuation adjustments.
- Current conditions are a 'yellow alert,' but higher yields could trigger more acute market stress.
- A 30-year yield climb towards 5.25% could lead to a more durable pullback in equity valuations.