Global markets are wrestling with a combination investors have not had to price for years: U.S. 10-year Treasury yields around 5.27%, expensive oil and still-powerful AI investment.
Higher long-term yields feed directly into mortgages, corporate borrowing and equity valuations. They also make safe government debt a more credible competitor for capital that might otherwise chase stocks.
The tension is that economic growth remains strong enough to keep inflation and rate expectations elevated. Markets therefore need either cooler data, lower energy prices or tighter financial conditions before the pressure on yields is likely to ease.