Rising government bond yields may put pressure on risk assets

Tickmill Group analyst Patrick Munnelly stated in a report that the accelerated rise in government bond yields may put pressure on risk assets. The yield on the US 10-year Treasury rose intraday to 5.148%, reaching its highest level since 2007; this reflects that the market has priced in expectations of further Federal Reserve rate hikes in the coming months. According to LSEG data, strong economic growth combined with inflation concerns has led the market to expect major central banks to raise interest rates multiple times in the coming year. Munnelly said: "If yields continue to climb and hit new cycle highs, risk assets will face pressure even with positive news regarding artificial intelligence and trade acting as support."