JPMorgan: U.S. Bond Yields Reaching 5% Could Pose a Risk to Equities

Huoxing Finance reports that on September 2, Grace Peters, Global Investment Strategy Head at JPMorgan Chase, stated that as global equities enter a historically weak September, rising bond yields pose a key risk to global stock markets. Peters expects further upside potential for U.S. and European equities this year, but warns that a 5% to 8% correction could still occur as risk events such as the U.S. midterm elections in November approach. Such a pullback would be considered healthy, rather than indicative of structural market deterioration. Rising bond yields have become the primary concern for equity investors. Markets are increasingly worried that higher oil prices will fuel inflation, pushing the 10-year U.S. Treasury yield to 4.8%, nearing the 5% level typically viewed as unfavorable for equities; meanwhile, the 30-year Treasury yield has risen to its highest level in 19 years. Market participants are increasingly speculating that policymakers will be forced to raise interest rates, driving yields back to levels seen before U.S. Treasury Secretary Bessent expanded repurchase operations to control long-term borrowing costs.