US 10-year bond yields near 16-year high. How can it impact Indian stock market?

livemint.com:

Mint reported, Federal Reserve Chair Jerome Powell said on Thursday, October 19, that inflation in the US remains too high and bringing it down to the Fed's 2 per cent target level will likely require a slower-growing economy and job market. US bond yields have gone up significantly, nearing the highest levels in 16 years. The prime reason for this is the uncertainty about future interest rates in the US.

A few weeks ago, everyone thought that there would be only one more rate hike. However, experts point out that Fed Chairman Powell on Thursday surprised everyone by suggesting that there might be more rate hikes in the future due to the strong economy and tight job market. Experts observed that just when markets were assuming that rates were high enough, this view from the Chief renewed the nervousness and brought US 10-year yields near the 5 per cent mark.

These levels were last seen in the year 2007. On Friday, US 10-year bond yields declined over a per cent and hovered near 4.94 per cent. Bond yields are influenced by the Federal Reserve's interest rates.

Experts say bond yields have been rising because of the current trend of higher interest rates. This can also be seen as an indirect signal of rising inflation and the anticipation of a potential economic slowdown, which in turn makes the cost of borrowing money higher. Apart from this, increased bond supply and and macro as well as geopolitical uncertainty have also contributed to the rise in bond yields.