While the recent decline in the equity markets is being blamed in large part on the rise in yields, there is little evidence historically showing that rising rates are necessarily bad for equities. In fact, just the opposite appears to be the case, with the S&P 500 actually outperforming on average in years in which 10-year Treasury yields have risen.
To be sure, there have been times when equities have fallen in a rising rate environment, most notably during the 1973-74 recessionary bear market when rising inflation was of great concern. But in the past 30 years, it has more often been the opposite outcome (sharply falling rates) that signaled problems for equities.
To be sure, there have been times when equities have fallen in a rising rate environment, most notably during the 1973-74 recessionary bear market when rising inflation was of great concern. But in the past 30 years, it has more often been the opposite outcome (sharply falling rates) that signaled problems for equities.
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