The 10-year U.S. Treasury yield touched 5% this week, its highest level in 19 years, before pulling back to 4.94%. According to Ruchir Sharma, founder of Breakout Capital, a sustained break above this threshold could weigh on equity markets, particularly AI-related stocks. Beyond 5.25%, historical data shows that equity prices decline as the higher discount rate reduces the value of future earnings. The Federal Reserve raised its benchmark rate to 3.75%-4% and projects inflation will remain above its 2% target until 2029, suggesting further rate hikes may be necessary.
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