Saudi Press

Saudi Arabia and the world
Monday, Oct 06, 2025

The stock market sure is acting strangely

The stock market sure is acting strangely

Wall Street is having a topsy-turvy moment. Long-term Treasury yields have shot up dramatically, and investors in stocks are cheering the bond market's big moves. That doesn't happen often. So what gives?

Rising rates are supposed to be a bad sign for stocks. In theory, higher yields for the 10-year US Treasury should make it more expensive to get mortgages and other types of consumer and business loans.

Spiking bond yields are also often associated with higher inflation — a big problem for consumers lately — and they are rising now amid concerns that the Federal Reserve will jack up short-term interest rates to keep surging prices in check. That's also not a welcome sign for stocks.

Granted, rates are still historically low, with the 10-year currently yielding only about 1.69%. That's a reason why Peter Wilson, global fixed income strategist with the Wells Fargo Investment Institute, recently called the relationship between yields and high inflation an "odd couple."

But look at how far and how quickly rates have risen in a short period of time. The 10-year yield is up from 1.51% last Friday and was a mere 0.92% at the end of 2020. That means bond yields have shot up more than 10% in just a few days and 80% in a little more than a year.

It appears that investors don't expect bond yields to climb much higher from current levels though, even if the Fed raises short-term rates several times this year. That could fuel further gains in the stock market.

Yields may not have that much further to climb


Ameriprise chief market strategist David Joy wrote in a 2022 outlook report this week that bond yields "are expected to come under further upward pressure" this year. He believes they may top out around 2%, which would lead to "uninspiring returns" from Treasuries.

Few are predicting the type of shock that would lead bond yields to move substantially higher. Experts believe stocks still look more attractive than bonds because the global economy is expected to continue its recovery from the Covid-19 pandemic.

That should lead to stronger earnings — possibly accompanied by higher inflation.

"We expect interest rates to move modestly higher in 2022 based on near-term inflation expectations above historical trends and improving growth expectations once the impact of Covid-19 variants recede," said Lawrence Gillum, fixed income strategist for LPL Financial, in a 2022 preview report.

Gillum added that he expects the 10-year Treasury yield to end 2022 close to current levels, at 1.75% to 2%.

"An aging global demographic that needs income, higher global debt levels and an ongoing bull market in equities may keep interest rates from going much higher," Gillum wrote.

That desire for more income from investors who have retired or are preparing to as part of the so-called Great Resignation could push sectors of the stock market even higher, said JPMorgan Funds chief global strategist David Kelly in a 2022 preview report.

Kelly noted that international stocks in particular tend to pay dividends that yield much more than US bonds and stocks. He said alternative assets like real estate and commodities may do better than bonds, too.

"Entering the New Year, a good resolution would be to rebalance across domestic stocks, international stocks, fixed income and alternatives," Kelly wrote, "both to enhance long-term return prospects and to protect against the surprises that 2022 may bring."

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Syria Holds First Elections Since Fall of Assad
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
UK, Canada, and Australia Officially Recognise Palestine in Historic Shift
New Eye Drops Show Promise in Replacing Reading Glasses for Presbyopia
Dubai Property Boom Shows Strain as Flippers Get Buyer’s Remorse
Top AI Researchers Are Heading Back to China as U.S. Struggles to Keep Pace
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
UAE-US Stargate Project Poised to Make Abu Dhabi a Global AI Powerhouse
Trump and Starmer Clash Over UK Recognition of Palestinian State Amid State Visit
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Kuwait opens bidding for construction of three cities to ease housing crunch.
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
Could AI Nursing Robots Help Healthcare Staffing Shortages?
Turkish authorities seize leading broadcaster amid fraud and tax investigation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Did the Houthis disrupt the internet in the Middle East? Submarine cables cut in the Red Sea
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Tether Expands into Gold Sector with Profit-Driven Diversification
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
Israeli Airstrike in Yemen Kills Houthi Prime Minister
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
×