Ameriprise warns higher long-term Treasury yields may pressure equity valuations
AMP•Higher long-dated Treasury yields seen as an equity valuation headwind
Ameriprise flagged rising long-dated Treasury yields as a potential equity valuation headwind, driven more by fiscal sustainability concerns than inflation.
- The 30-year Treasury yield ended at 5.25%, its highest close since 2007; the 10-year auction cleared at 4.68%, also the highest since 2007.
- Heavy supply was highlighted by $67 billion in long-dated issuance, with investors demanding higher yields to absorb new debt.
- The CBO outlook shows deficits near 6% of GDP; debt held by the public is projected to rise from 101% of GDP in 2026 toward 118%–120%.
- Equities have largely looked through higher yields as earnings forecasts remain strong, with FactSet projecting 2026 EPS growth near 31%.
- A steeper yield curve is seen supporting banks and insurers, while utilities and REITs face tougher competition for capital as Treasury yields rise.
- A key market watchpoint is keeping the 10-year Treasury yield below 5%; the year-end forecast is 4.5%.
