U.S. Treasurys have entered a “danger zone,” with long-term yields surging amid concerns over persistent inflation and hawkish interest rate expectations, according to HSBC. On Tuesday, the 30-year Treasury yield surpassed 5.19%, marking its highest level since 2007, while the benchmark 10-year yield approached 4.69%. HSBC strategists highlighted that the current yield levels are likely to exert pressure on various asset classes, raising the potential for a broader market pullback.

This selloff in government bonds has significant implications for equities and risk assets. Despite recent resilience in the markets, driven by strong corporate earnings and adjusted valuations, the psychological impact of rising yields cannot be overlooked. Analysts warn that if 10-year yields reach 4.65% or 30-year yields hit 5.5%, it could trigger heightened market stress and a more durable decline in equity valuations.

Market professionals should closely monitor these yield movements, as further increases—particularly beyond 5.25% for the 30-year bond—could signal an impending correction in stock prices.

Source: cnbc.com