Why the Bond Market May Be the Stock Market's Biggest Risk
- US 10-Year Treasury yields rose to their highest level since 2007, and the bond market poses the greatest risk to further equity gains, according to Tony Pasquariello, Goldman Sachs global head of hedge fund coverage.
- S&P 500 earnings growth has been strong but may slow from 25–30% to 10–12%, potentially reducing the pace of stock returns from their current double-digit annual pace.
- Shorting bonds is suggested as a useful hedge for equity investments.
- Japan's TOPIX is identified as an opportunity, supported by shareholder reforms and government spending on defense and industrialization.