What 5% treasury yields mean for investors: Strategist explains
Treasury bond yields (^TNX, ^FVX, ^TYX) have been climbing higher, with markets widely concerned about the 10-year Treasury yield potentially exceeding 5%. RBC Capital Markets head of US equity strategy Lori Calvasina joins Market Domination to share her analysis. "It's sort of just a big round scary psychological number, but you do need to dig a little deeper," Calvasina explains, noting that if the 10-year Treasury yield breaks above 5%, "we're going to be breaking above some important highs that were put in place prior to the financial crisis." She points out that markets have primarily operated in a secular declining interest rate environment. However, rising yields would signal a shift toward a structurally rising rate environment. Regarding the relationship between earnings yield and PE yield, Calvasina observes that if this gap continues to widen "in a pretty significant way, it sort of hits people over the head with the idea that there is not a lot of value in the equity market relative to the bond market." Watch the full video above to hear Calvasina's in-depth views on how the PE multiples will impact equity markets. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Angel Smith
