Wall Street Warns U.S. Stocks May Face "Inflation Repricing" as Soaring Oil Prices and U.S. Bond Yields Exacerbate Market Risk

BlockBeats News, May 18th - While the U.S. stock market continues to maintain its high levels, Wall Street institutions are starting to warn that the market may be underestimating inflation and interest rate risks. The recent surge in the 30-year Treasury bond yield above 5% and the 10-year Treasury bond yield rising above 4.5% have raised concerns in the market about the pressure on the valuation of risk assets.

Analysts point out that since the escalation of tensions between the U.S. and Iran, the international oil price has remained above $100 per barrel, and the potential long-term disruption of the Strait of Hormuz is increasing market concerns about a new round of inflation. Capital Economics has warned that the market has not fully priced in the extreme scenario of a long-term blockade of the Strait of Hormuz.

Despite the AI investment frenzy and strong corporate earnings supporting the U.S. stock performance, some institutions believe that the current S&P 500 forward P/E ratio has risen to 21.3 times, significantly above its long-term average. With the bond market leading the way in repricing inflation, the stock market may face dual pressure from valuation and liquidity.