Rising bond yields: How our views on stocks and bonds are changing

Beansprout Pro in Brief

• The recent sharp rise in global bond yields and pullback in stock markets have prompted us to reassess the relative attractiveness of equities and bonds, and whether a change in portfolio positioning is warranted.
• For equities, higher bond yields could limit further valuation expansion, making earnings growth increasingly important. We examine what this means for different types of companies, including those benefiting from AI investments.
• For bonds, higher yields have improved potential returns, but the risk of further increases in interest rates remains. We illustrate how different interest rate scenarios could affect bond returns.
• We also examine the opportunities and risks across different bond maturities, including the important differences between investing in individual bonds and bond funds.
• In this update, we share how our investment outlook is shaping our approach to the Income and Opportunity Pots, and what could prompt us to adjust our positioning.