For My choice: U.S. stocks
If rates stay higher for longer, U.S. stocks—especially high-growth and high- valuation tech stocks—could feel the most pressure.
Why?
Higher rates make borrowing more expensive.
Future company profits become worth less today.
Expensive growth stocks are more sensitive to higher yields.
The stronger dollar can also pressure multinational companies.
Treasury bonds would also be affected, but yields rising can partly offset the impact for new bond buyers. Gold may also face pressure from higher real yields, although geopolitical risks can support it.
Bottom line:
Higher rates → higher Treasury yields → more pressure on expensive stocks.
For me, the key number to watch is the 10-year Treasury yield, not just the Fed rate.
Two Rounds of Treasury Buybacks, and Long-End Yields Still Hit a New High?
The Treasury bought 20- to 30-year debt again Wednesday, capped at $6B — second round in two weeks; the first filled only $5.2B. The bid came, yields didn't fall: the 10-year closed at 5.11%, up 15bp and the highest since 2007, as was the 30-year. October Fed hike odds hit 69.7%. Stocks fell: Nasdaq -1.13% to 26,936.04, erasing Tuesday's record; QQQ -0.84% to $741.21; S&P 500 -0.75% to 7,706.03; Dow -0.68% to 51,511.59. Bulls say firm data, not weak demand, is lifting yields; bears say two buybacks and a new high prove the bid can't absorb supply. At what yield do you redo the math on stocks?
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