Scaremongering About 5% Bond Yields Misses the Point

Investors and households are superstitious about round numbers, especially 5% yields on 10-year Treasury notes that influence mortgage rates and other borrowing costs. Rockefeller International Chairman Ruchir Sharma wrote in the Financial Times that the “AI bubble could pop” when the yield “decisively” breaches that level. Morgan Stanley’s Chief Investment Officer Mike Wilson recently described a rise above 5% as “the biggest risk to this consolidation turning into a correction” for US stocks.