Where 10-year yields go from here will be a major determinant for all investors in both equities and credit (which as an asset class has also benefited from record inflows).
Arguably though, what matters more for the real economy and for the growth trajectory is what actually happens to U.S. real yields (the nominal yield that is adjusted for inflation). The U.S. 10-year real yield is still only around 0.50 percent, a historically low level. When compared to the average dividend yield of around 2.2 percent in the S&P, equities do not look rich relatively. That 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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