Analysis: From stocks to bitcoin, soaring US yields cast shadow over risk asset rally

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Surging U.S. Treasury yields are sending shudders through riskier areas of the market, leaving investors to wonder how badly it will dent a rally that has lifted everything from stocks to bitcoin this year.

Higher Treasury yields - which move inversely to bond prices - can take the shine off speculative assets by offering investors attractive payouts on an investment seen as basically risk free because it is backed by the U.S. government. Rising rates also increase the cost of capital throughout the economy, making it more difficult for everyone from individuals to companies to service debt.

A crucial test for markets comes later in the week with the annual gathering of central bankers in Jackson Hole, Wyoming. Fed Chair Jerome Powell is due to deliver a talk on the economic outlook on Friday. Investor equity positioning, as measured by Deutsche Bank, dropped for a fourth straight week to a two-month low.

 

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