Dennis DeBusschere, chief market strategist at 22V Research, highlighted that a rise in the 10-year U.S. Treasury yield to 5% or oil prices exceeding $115 per barrel could lead to 'demand destruction,' potentially causing GDP growth to fall below 1% over several quarters.
As of Tuesday, the 10-year Treasury yield reached approximately 4.65%, its highest since early 2025, and Brent crude futures traded above $110 per barrel, marking a 54% increase since the onset of the U.S.-Iran War. DeBusschere noted that the rapid rise in yields raises concerns about potential economic disruptions, stating that the intensity and duration of supply constraints remain uncertain.
Meanwhile, stocks experienced a pullback due to rising rates, although major indexes remain near all-time highs, driven by expectations of strong GDP growth, particularly in technology and energy sectors.
Goldman Sachs projects nominal global GDP growth to rise to 5.9% in 2026, up from 4.7% last year, but warns that a sharp increase in bond yields poses significant risks for stock investors, particularly if inflation remains high