Ray Dalio: cushion against rising rates is shrinking as U.S. yields top 5.3%
Bridgewater founder Ray Dalio warns that rising bond yields could weigh increasingly on stocks. The 10-year U.S. Treasury yield peaked above 5.3%, its highest in more than two decades.
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Bridgewater Associates founder Ray Dalio has warned that pressure from rising bond yields could intensify. In a CNBC interview in Singapore, he said stocks had so far absorbed higher rates because corporate earnings were growing strongly enough, but that this cushion was shrinking, onvista reported.
The 10-year U.S. Treasury yield peaked above 5.3%, its highest level in more than two decades, driven by higher inflation expectations, growing U.S. debt and the capital needs of AI data centres. According to Reuters, U.S. and French yields are at 24-year highs, and the spread between French and German 10-year bonds is about 136 basis points, up from below 100 a month ago.
Dalio did not say whether he expects a stock market correction soon, but said financing conditions were not yet tight enough to curb lending or consumption. But he expects further bond sell-offs as governments and companies compete for new capital. "I think one should watch free cash flow, not just profits," he advised investors.