Bank of America: Year-end 10-year Treasury yield target raised to 5%, high interest rates will continue to revalue risk assets.

BlockBeats news, September 25: Bank of America, in its latest research report, raised its year-end forecast for the US 10-year Treasury yield from 4.5% to 5%, while also raising its forecast for the 2-year US Treasury yield to 5%. It is worth noting that before the forecast adjustment, the US 10-year Treasury yield had already risen to 5.14% on September 23, hitting its highest level since 2007, so the core message of this report is not that yields will continue to rise mechanically, but that the market will face a longer period of high interest rates.

Bank of America listed Iran-related energy risks, US fiscal pressure, trade frictions, and uncertainties surrounding AI investment and the macroeconomic outlook as the main variables, and raised its average Brent crude oil price forecast for the second half of this year from $83 per barrel to $95 per barrel. If oil prices remain elevated for a long time, it will push up inflation expectations and also increase pressure on the Federal Reserve to continue tightening policy.

For risk assets, keeping the 10-year yield near 5% will affect both valuations and capital flows. A higher risk-free rate will lower the discounted value of future cash flows, and the valuation elasticity of growth stocks, AI infrastructure stocks, and high-valuation technology stocks will come under pressure first; rising Treasury yields will also increase corporate financing costs and enhance the appeal of US dollar assets relative to highly volatile assets such as cryptocurrencies. The market had previously listed "disorderly rise in bond yields" as a major tail risk, surpassing concerns about an AI valuation bubble.

However, Bank of America's rate hike does not mean a full turn to bearish equities. Its September market outlook still believes that amid the combined disturbances of oil prices, yields, and rate hike expectations, periodic pullbacks may provide windows for positioning. Next, oil price trends, inflation data, the Federal Reserve's path, and US fiscal financing pressure will determine whether the 5% yield is merely a short-term high or a new valuation anchor that risk assets must adapt to in the fourth quarter.