Rising Treasury Yields And Why I Remain Underweight Equities

US 30-Year Treasury yields have surged to ~5.19%, near 52-week highs, despite unchanged short-term rates.

The increased term premiums haven’t impacted equity valuations, which remain elevated.

The yield curve has steepened, reflecting market caution on U.S. debt servicing and persistent inflation concerns.

U.S. government debt has breached ~$40 trillion, intensifying scrutiny of long-term fiscal sustainability.

AI spenders increasingly face concerns regarding the eventual IRR of their capital spendings in the dynamic changing environment.

Rising Treasury yields have further increased the opportunity cost of allocating funds to equities, at a time when equities are already richly priced.

The U.S. 30-year Treasury has reached close to its 52-week high, currently being around ~5.19%, which is more than ~50 basis points higher than it was six months ago.

The same time period, however, has not been accompanied by Fed rate increases.

Ultra-short-term yields have largely remained stable, while yields