Why rising bond yields are playing on stockholders’ nerves

THE FIRST full-length film made by Steven Spielberg features an unusual lead. So indeed does much of his more celebrated work. But the star of “Duel”, his 1971 debut, is nothing as exotic as a man-eating shark or cloned velociraptor. It is a tailgating lorry. In a nerve-shredding journey across the California desert, it torments a middle-aged salesman driving a rickety Plymouth Valiant. That its driver is faceless adds to the air of malice.

For investors in equities, bond yields are the juggernaut that looms menacingly in the wing mirror. Twice this year—first in February and again earlier this month—a jump in Treasury yields was followed by a sell-off in stockmarkets. There is reason for the jitters. A long bull market, driven in part by low interest rates, has left shares in America richly priced. And with interest rates still on the rise, nerves are rattled about the level of stock prices.

That is as it should be. By...

via The Economist: Finance and economics Business Feeds

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