Will bond markets gain at equity's expense riding on higher for longer rate regime?

economictimes.indiatimes.com:

Reserve Bank of India (RBI) maintains a tighter monetary policy stance for a longer than anticipated period. In his monetary policy speech on Friday, Governor Shaktikanta Das mentioned how global equity markets have corrected in the wake of sovereign bond yields having firmed up and the US dollar appreciating.

“When 10 year US Bond yields fall below 3%, equities will have attractive risk reward propositions. Till that time bonds will continue to compete with equities," Umesh Kumar Mehta, Chief Investment Officer at SAMCO Mutual Fund said.

«It is indeed a turning pitch as far as inflation is concerned for the RBI but on the other side global market forces are scaring all the central bankers on higher bond yields, which are getting stronger by the day. The current pause wouldn’t last long, for that matter, for any central bank. The rates are likely to move higher before the actual pivot happening sometime in the middle of the next year.

So, equities will have serious competition from bonds going forward,» he said.

While bond yields in India have been hovering between 7.30 and 7.40%, Nifty's 3-month returns stand at 1.11% while they turn negative 1.38% over a 1 month period. Elevated interest rates give an opportunity to bond market investors to lock investments at higher rates and they reap benefits if the bond prices go down.
«Elevated interest rates present a way for investors to lock into high-yield debt instruments.

The benefits are twin-fold. The high rates give them higher interest income. Secondly, when interest rates decline, there will be capital appreciation as well.