The US stock market remains resilient, even as 10-year Treasury bonds fluctuate. In August, the yield of these bonds reached a 16-year record of 4.36%. However, even if it rises to 4.5%, many don’t anticipate major disruptions for the S&P 500 index — it might drop, but likely no more than 10%.
Interestingly, many experts predict that bond yields will decrease to around 4% by the end of the year. Additionally, many believe the correlation between stocks and bonds will shift from positive to negative.
For those investing in stocks and bonds, it’s worth paying attention to the time-tested 60/40 strategy. The 60/40 strategy is a classic investment approach in which an investor’s portfolio is distributed between stocks and bonds at a 60% to 40% ratio, respectively. Despite challenges last year, 59% of investors find it effective.
And now for the most intriguing part: a rise in bond yields could pose a risk to the tech sector and real estate market. Meanwhile, the banking sector might stand to benefit from such shifts.
