JPMorgan: US Treasury yields rising to 5% could pose risks to the stock market.

Grace Peters, head of global investment strategy at JPMorgan, stated that with global stocks posting their weakest September performance in history, the sustained rise in bond yields poses a key risk to global equity markets. Peters forecasts that U.S. and European equities still have room for further gains this year, but she warned that as risk events like the November U.S. midterm elections approach, stocks could still see a 5% to 8% correction. This would be a healthy pullback, not a structural market deterioration. Rising bond yields have become a top concern for stock investors. Growing market anxiety that rising oil prices will stoke inflation has pushed the 10-year U.S. Treasury yield to 4.8%, near the 5% threshold generally viewed as unfavorable for stocks; meanwhile, the 30-year U.S. Treasury yield has climbed to its highest level in 19 years. Markets are increasingly speculating that policymakers will be forced to hike interest rates, driving yields back to levels prior to when U.S. Treasury Secretary Bessent expanded repurchase operations to cap long-term borrowing costs.