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ubs warns 5 percent treasury yield could signal equities downturn

UBS strategists, led by Andrew Garthwaite, warn that a 5% yield on the US 10-year Treasury could negatively impact equities, with a 35% chance of a stock market bubble emerging. They recommend focusing on defensives with low financial leverage and suggest UK bond-sensitive sectors are currently undervalued. The team anticipates US bond yields will drop to 4.25% by year-end, while highlighting Japan as the best-performing region amid rising TIPS yields.

ubs warns of equity market turning point at 5 percent bond yield

UBS strategists warn that a 5% yield on 10-year US government bonds could indicate a turning point for equities, with a 35% chance of an equity bubble forming. They recommend underweighting non-financial cyclical stocks and favor defensive stocks with low financial leverage, particularly in the UK, where they see opportunities in utilities and real estate.

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