Rising bond yield could alter risk-reward play\, scupper stock market rally

Rising bond yield could alter risk-reward play, scupper stock market rally

The "risk-free" yield on 10-yr g-sec is a threshold for investors. If its softens, investors get into riskier assets like equities. If it hardens, they settle for attractive risk-free rate on offer

Topics
Bond Yields | Nifty50 | stock market rally

Samie Modak  |  Mumbai 

Rising yields on the 10-year government security (g-sec) could act as a headwind for the current stock market rally as it would alter the risk-reward equation. In recent weeks, the yield on the 10-year g-sec has risen as much as 40 basis points to trade above the 6-per cent mark.

The “risk-free” yield on the benchmark government security acts often a threshold for investors to take risk. If the yields soften investors are lured into investing in riskier assets like equities and if the yields harden, the appetite diminishes as investors settle for attractive risk-free rate ...
First Published: Mon, September 07 2020. 20:06 IST