17 August 2023
US inflation-adjusted bond yields have soared to alarming levels not seen since the 2008 financial crisis, with real yields spiking to 185bps — the most since the Lehman Brothers debacle. This sharp ascent signifies increasingly burdensome borrowing conditions in the US. Rising real yields not only boost the allure of bonds but also cast a shadow over the stock market’s prospects. As the Fed intensifies its interest rate hikes to combat persistently high inflation, ominous signs like an inverted yield curve hint at deeper economic turbulence ahead. Market experts warn of a potential downturn and lasting repercussions.