Peter Oppenheimer, chief global equity strategist at Goldman Sachs, warns of the impact of soaring bond yields. This is likely to further dampen equity markets, which are already under pressure due to high valuations.
Historically, there was a positive correlation between equities and bonds, but those days seem to be over. Today, rising yields mean higher capital costs, which weighs on all asset classes.
The speed at which yields rise is crucial: the faster they rise, the more equities suffer. And recently, this rise has been particularly abrupt. Oppenheimer points to a paradigm shift: Rising public deficits should lead to higher and more persistent long-term interest rates, affecting all asset classes.
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