Morgan Stanley Interpretation: Why 4.5% is the watershed for the impact of U.S. Treasury bonds on U.S. stocks?

Morgan Stanley's chief strategist Michael Wilson pointed out that the recent rise in U.S. Treasury yields is mainly due to an increase in term premium, rather than an improvement in growth expectations. He believes that the optimal point for stock valuations is when the 10-year U.S. Treasury yield is in the range of 4.00%-4.50%, and a breakthrough of 4.50% may increase the interest rate sensitivity of stocks. As rates break through this level, stock valuations are compressed, and the negative correlation between stock returns and bond yields stabilizes. In the future, stock performance will mainly be influenced by backend rates and term premiums