Tatton says rising government bond yields threaten to test AI-led equity rally
TLT•Tatton Asset Management said rising long-term government bond yields and wider credit spreads risk pressuring equity valuations. UK 20-year inflation-linked bonds yield about 2.6% above inflation, while US 10-year yields are near 3.2%.
1. Yields and valuations
Tatton Asset Management flagged rising long-term government bond yields as a growing risk to equity valuations and the AI-led technology rally. UK 20-year inflation-linked bonds yield about 2.6% above inflation, while US 10-year inflation-linked yields are near 3.2% above inflation.
2. Credit and earnings
Wider credit spreads signaled tighter liquidity, raising refinancing costs and increasing the risk of pressure on price-to-earnings multiples. A reported OpenAI annualized revenue figure of $50 billion, below expectations of $70 billion, briefly hit chip stocks before a metrics clarification reversed most losses. Tatton said earnings season is the key near-term test, with markets needing either stronger profit growth or lower yields to stabilize sentiment.
