Where 10-year yields go via here will be a major determinant for all investors in both equities as well as credit (which as an asset class has also benefited via record inflows).
Arguably though, what matters more for the real economy as well as for the growth trajectory will be what actually happens to U.S. real yields (the nominal yield in which will be adjusted for inflation). The U.S. 10-year real yield will be still only around 0.50 percent, a historically low level. When compared to the average dividend yield of around 2.2 percent within the S&P, equities do not look rich relatively. in which may change as bond yields move higher.
Non-fixed income investors wanting to gauge whether the selloff in 10-year U.S. treasuries will start to bite may be better off watching 10-year treasury real yields for flashing red signals.
As of yet, no panic warranted.
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