Soaring Treasury yields ignite turbulence throughout markets

investing.com:

By Saqib Iqbal Ahmed

NEW YORK (Reuters) — A selloff in U.S. government bonds is jolting everything from stocks to the real estate market, as investors recalibrate their portfolios amid a surge in Treasury yields to their highest levels in more than a decade and a half.

Yields on the benchmark 10-year US Treasury, which move inversely to prices, stand near levels last seen in 2007 following a selloff fueled by a hawkish outlook from the Federal Reserve and mounting fiscal concerns. Treasuries are on track to post their third straight annual loss, an event without precedence in U.S. history, according to Bank of America Global Research.

Because the $25-trillion Treasury market is considered the bedrock of the global financial system, soaring yields on U.S. government bonds have had wide-ranging effects. The S&P 500 is down about 8% from its highs of the year, as the promise of guaranteed yields on U.S. government debt draws investors away from equities. Mortgage rates, meanwhile, stand at more than 20-year highs, weighing on real estate prices.

Here's a look at some of the ways rising yields have reverberated throughout markets.

Higher Treasury yields can curb investors' appetite for stocks and other risky assets by tightening financial conditions as they raise the cost of credit for companies and individuals.

With some Treasury maturities offering far above 5% to investors holding the bonds to term, rising yields have also dulled the allure of equities. High-dividend paying stocks in sectors such as utilities and real estate have been among the worst hit, as investors gravitate toward government debt.

Shares of tech and growth companies, whose future profits are discounted more sharply against higher yields, have also