JPMorgan warns that rising bond yields nearing 5% pose a risk to global equities.

Grace Peters, Head of Global Investment Strategy at J.P. Morgan, stated that rising bond yields pose a key risk to global equities as markets experience one of their weakest Septembers on record. Peters expects further upside potential for U.S. and European equities this year, but warned that a 5% to 8% correction remains possible as risk events such as the U.S. midterm elections in November approach. This would constitute a healthy correction rather than a structural deterioration in markets. Rising bond yields have become a primary concern for equity investors. Markets are increasingly worried that higher oil prices could 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. (Jin10)