The U.S. 10-year Treasury yield surged above 5% on Tuesday, reaching 5.03%—its highest level since 2007—as elevated oil prices, persistent inflation concerns and expectations of further Federal Reserve tightening triggered another bond selloff. The move is reshaping risk appetite across equities and crypto, with fund managers pulling back from aggressive stock positioning.
Bank of America's latest fund manager survey showed net overweight global equities fell to 49% from 56%, while investors rebuilt cash positions. A disorderly bond selloff has become the top tail risk, replacing recession or earnings fears. Cash levels had fallen to just 3.5% in August, when equity exposure hit its highest since November 2021.
The repricing is not limited to the U.S. Yields have climbed across major markets including Germany, Japan and Australia, turning the current selloff into a broader global repricing of interest-rate risk. U.S. ETF investors have increasingly favored short- and intermediate-term bonds, with short-term Treasury ETFs attracting $12.2 billion over 20 trading sessions through Sept. 8.
High-growth technology and AI stocks are especially vulnerable because much of their valuation depends on profits expected years into the future. CoreWeave faces a financing squeeze after securing an $8.5 billion loan in March and accumulating roughly $28 billion in equity and debt commitments. Marvell has a $30 billion custom-chip connectivity opportunity, but distant cash flows lose value when Treasuries yield more than 5%. AMD, Nvidia and Tesla similarly face higher valuation hurdles despite intact AI and mobility narratives.
For crypto markets, the macro backdrop is a headwind. The recent return of crude toward $108 has already put Bitcoin and technology stocks under renewed pressure. If Treasury yields remain elevated or keep climbing, Bitcoin and other long-duration risk assets may continue to face competition from government bonds offering around 5% without equity or crypto risk.
