Rising Treasury yields and election uncertainty drive a shift toward cash, as the 10-year yield hits 5.02%, pressuring equity valuations and dampening appetite for growth stocks like Micron.
Rising Treasury yields make bonds more attractive relative to equities, potentially reducing demand for stocks like Micron.
Global fund managers are retreating from equities as the 10-year U.S. Treasury yield climbs to a 16-year high of 5.02%. Bank of America's latest survey reveals a decline in bullish sentiment to 49%, with cash allocations rising as investors weigh the impact of persistent inflation and Federal Reserve interest rate expectations on market valuations.
Higher Treasury yields provide a more attractive risk-free return, making bonds more competitive against equities and reducing the incentive for investors to take on the volatility associated with corporate earnings.