The 10-year Treasury yield still has some way to go before investors scramble to buy bonds, according to Bank of America. The bank's latest global fund manager survey — one of the most followed on Wall Street — found that 37% of investors would consider shifting from stocks to bonds once the 10-year yield reached 6%.
Another 14% surveyed pointed to 6.5%, while 19% said yields are already high enough to prompt a shift. That threshold is within striking distance after a sharp rise in yields this year. The 10-year Treasury yield hit a 24-year high of 5.365% last week. On Tuesday, it traded around 5.21%.
Yields have surged in recent weeks as investors worry that higher oil prices due to the war in the Middle East could drive inflation higher — and force the Federal Reserve to tighten monetary policy. Cleveland Fed President Beth Hammack said Monday that higher rates could be necessary to prevent an " inflationary mindset " from taking hold.
Higher Treasury yields can make bonds more attractive relative to stocks while also pushing up borrowing costs across the economy, potentially weighing on housing, corporate investment and consumer demand. Investors will get a better clue on where yields will head this week, with September consumer inflation data due Wednesday, followed by producer prices Thursday