According to Business Insider, MRB Partners strategist Phillip Colmar warned that surging long-term Treasury yields are setting up a de-risking event. The 10-year yield has climbed above 4.7%, while the 30-year topped 5.2%. Colmar flagged that a move to 5% on the 10-year could trigger a 15% to 20% drop in the S&P 500.
Higher long rates reprice the entire equity market. They raise the discount rate on Big Tech earnings, private equity deals, and any cash flow that lives years out. More immediately, Treasurys become real competition for capital. When the risk-free rate pays 4.7%, money stops chasing stocks for growth alone.
Stocks tolerate bad news when money is free. They break when the risk-free rate starts looking good. The pressure isn't a single spike to 5%. It's the grind. If Washington keeps issuing debt, growth holds, and inflation stays sticky, yields don't need to explode. They just need to climb past 4.8%, then 4.9%, long enough to break the habit of buying every dip. That's when the 20% drop stops being a warning and starts being a price.
Filed to the Markets desk · Aug 22