Agencies The yield on the US 10-year and 30-year government bonds hit 5.34% and 5.69% respectively to their highest levels since April 2002 and May 2002.
Synopsis US equities have largely remained strong, aided by robust earnings growth driven by the AI capital expenditure cycle.
Rising bond yields and geopolitical tensions, however, are beginning to impact investor sentiment negatively.
Analysts are concerned about the sustainability of the AI capex cycle and its expected returns.
Additionally, there is a realization that G7 government bonds are entering a structural bear market.
By ET Bureau Oct 03, 2026, 07:56:00 AM IST Follow us Mumbai: US equities have largely shrugged off rising bond yields and geopolitical tensions so far this year, helped by strong earnings growth fuelled by the AI capital expenditure cycle, said Jefferies global equity strategist Chris Wood.
Still, the bond market is now reaching levels where the risks to equities are growing, most particularly with the US Federal Reserve turning more hawkish, he said in his newsletter Greed & Fear.ADVERTISEMENT The yield on the US ten-year and 30-year government bonds hit 5.34% and 5.69% respectively to their highest levels since April 2002 and May 2002, partly contributing to last week's slide in Indian equities, which posted their eighth straight week of losses till Friday.
Why soaring bond yields may hurt Sensex, Nifty more than elevated oil prices While US stocks have historically tended to perform poorly in the run-up to mid-term elections before rallying thereafter, that pattern has not played out this year, according to Wood.
"The stock market has historically done relatively badly going into the mid-terms whereas that has not been the case so far this year, primarily because of the stellar earnings growth driven by the highly earnings-accretive AI capex cycle," he said.
