One of the clearest winners from a modest rise in Treasury yields could be equities, particularly those most exposed to a reflating economy. The MSCI AC World Index is at a record, and rotation to cyclical shares such as industrial and materials names accelerated last month.
NEW YORK: One of the year’s biggest spikes in Treasury yields has investors mapping out the impact of rising rates on markets ranging from stocks to corporate bonds.
Renewed optimism about US stimulus talks pushed the benchmark 10-year yield to a high of 0.96% on Wednesday, a move which if continued could spark a domino effect across risk assets trading at all-time highs thanks to low interest rates.
At issue is whether the jump in yields is accompanied by an economic recovery and moderate levels of inflation that would allow the Federal Reserve to keep rates low.
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