9% and is marching towards the crucial 5% level that it had last hit briefly in 2023. Yes Securities issued a contrarian bet, saying the rise in global yields increasingly reflects stronger nominal growth, a structurally higher equilibrium real rate and synchronised global monetary normalisation, rather than deteriorating economic fundamentals or an imminent fiscal crisis.

comWhile doomsday prophets continue to raise the alarm and spook investors about negative implications for equity markets and interest rate scenarios if the benchmark 10-year US Treasury yield crosses 5%, some analysts feel the fears are overblown. 9% and is marching towards the crucial 5% level that it had last hit briefly in 2023.

Yes Securities issued a contrarian bet, saying the rise in global yields increasingly reflects stronger nominal growth, a structurally higher equilibrium real rate and synchronised global monetary normalisation, rather than deteriorating economic fundamentals or an imminent fiscal crisis. 65% supports a structurally higher cost of capital, the brokerage said.

It further noted that strong interest-coverage ratios across major technology companies and contained credit spreads provide additional balance-sheet resilience, while synchronised rate increases globally reduce the risk of a destabilising dollar or emerging market shock. Will rising bond yields cause a big market crash?

In this background, the domestic brokerage feels a 5% Treasury yield need not be restrictive for equities if corporate revenues and earnings continue to grow, as stronger cash flows can offset a higher discount rate. 2% range, which it views as tolerable cost of capital in a higher growth economy, rather than an equity-market breaking point.

The risk profile changes materially only if yields sustainably move towards 6-7%, which would likely signal de-anchored inflation expectations, deteriorating fiscal credibility or a significant increase in rstar, potentially overwhelming earnings and nominal GDP growth, it warned.. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication.

The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist.