Some points from RBC on US equities vs. higher rates. Last week the 10-year US Treasury yield hit its highest in 16 years, so the question of how stocks perform in a higher rate environment is pertinent.
Main points from RBC:
- S&P 500 tends to keep rising when the move in 10-year yields has been limited to less than 275 basis points. When the surges in yields are more than that, the stock market tends to decline (though long-term investors will take comfort in the fact that the 12-month forward gains in the S&P 500 that follow tend to be well above trend)
- “If we use early April 2023 as the starting point for the current yield surge, we are still in the category of milder moves. Of course, it is debatable what the starting point for the current surge in yields should be.”
ps. The US Bond market was closed Monday for the Federal Holiday
