- US Treasury yields above 5% may reduce investor confidence in India’s equity markets
- Rising bond yields prompt investors to prefer safer returns from government-backed bonds
- 10-year US Treasury yield surpassed 5% amid inflation and higher energy costs in 2026
US Treasury yields remaining above 5% is is likely to impact investor confidence in India, with uncertainty among investors over whether to remove to funds from equity and prefer assets that provide safer returns such as bonds.
Speaking to NDTV Profit, Peter Mcguire,Chief Strategist Asia- Pacific at XM.com said, "I think it's going to be consumer confidence. You know, market sentiment is one of great concern. Where do people look for a return on an equity? Do they say, I'll go out of the market, I'll I'll I'll remove funds from from the equity markets, and look for the safe return as far as bond yields."
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The benchmark 10-year US Treasury yield rose above 5% in mid-September 2026 amid continued inflation concerns and higher energy costs.
With bond yields rising, investors are increasingly uncertain over whether to seek further gains in equities and protecting capital through safer instruments. Investors are increasingly looking at the safety of bonds, given their government backing. When two-year US Treasury yields are above 5%, or even close to that level, the returns become particularly attractive for investors seeking relatively safe assets, he noted.
"There's always that in the back of people's minds as far as, yes, there's a fear of missing out for further gains, but there's also a safety mechanism built into trading mindsets. Where do I minimize risk? What's my risk profile? And is it safer to be in bonds for a given period of time?," Mcguire said. " All of these factors are weighing on decisions from equity market investors, traders, currency traders," he added.
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