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Rising Bond Yields Threaten US Equities as Credit Spreads Widen: Jefferies Warns
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News18•02-10-2026, 11:15
Rising Bond Yields Threaten US Equities as Credit Spreads Widen: Jefferies Warns
- •Jefferies warns that increasing US bond yields are raising risks for equities, with the spillover now impacting credit markets.
- •US 10-year and 30-year Treasury yields hit their highest levels since 2002, signaling potential further rate hikes by a hawkish Federal Reserve.
- •The bond sell-off has increased market volatility (MOVE Index) and widened US high-yield credit spreads, indicating stress in the financial system.
- •Despite strong corporate earnings, particularly in IT, which have buffered equities so far, the sustainability of the rally depends on AI capital expenditure returns.
- •Jefferies highlights elevated bond yields, rising credit market volatility, and questions about AI-led earnings growth as key ongoing concerns for equities.
Key Questions Answered
According to Jefferies' Greed & Fear report, the US 10-year and 30-year Treasury yields reached 5.34 per cent and 5.69 per cent respectively, marking their highest levels since April and May 2002.
Strong corporate earnings have allowed US equities to withstand these pressures, with S&P 500 third-quarter 2026 earnings expected to grow 30.2 per cent year-on-year, led by significant growth in information technology earnings.
Jefferies noted that the two-year Treasury bond yield peaked at 4.96 per cent, which is 108 basis points above the midpoint of the federal funds rate, serving as an indicator that more rate hikes are coming.
