French bank Societe Generale's global asset allocation chief, Alain Bokobsa, has identified the 10-year US Treasury yield reaching 5.5% as the tipping point where elevated borrowing costs begin to crush earnings growth and exert pressure on stock valuations. He notes that global earnings expectations have been significantly revised upward this year, which has so far prevented a collapse in the equity risk premium despite rising yields. With US markets closed Monday for the Labor Day holiday, the 10-year yield currently stands at 4.78%. In an interview, Bokobsa remarked that "stocks are not priced more expensively now than they were at the start of the year." However, he cautions that the 5.5% yield threshold would mark a pivotal shift, where upward earnings revisions would no longer suffice to justify current valuations—the point at which "stocks begin to come under attack."

Bokobsa anticipates that upcoming monetary policy adjustments from the Federal Reserve and the European Central Bank will be "moderate" and unlikely to aggressively break the current economic cycle or quell concerns about higher inflation. He describes the broader trend as a "secular rise" in nominal GDP, fueled by persistent fiscal spending in economies such as Germany and Japan, sticky inflation, and surging capital demand driven by AI infrastructure investments. He views this as a fundamental shift that began in the early 2020s, with little sign of the dynamic reversing in the near term.

The bond market has reasserted its dominance over equity investors in recent weeks. Yields have spiked sharply as escalating US-Iran conflict has pushed oil prices and inflation concerns higher. Hawkish signals from the Federal Reserve and the ECB, fiscal worries, and intensifying competition for capital amid the AI spending boom have added further strain. Grace Peters of JPMorgan stated last week that a 10-year yield reaching 5% would carry psychological significance, potentially triggering a reflexive rally or selloff in equities. Similarly, Emmanuel Cau of Barclays noted that yields approaching 5% would heighten investor anxiety over the impact on stock markets.