The benchmark 10-year US Treasury yield has crossed the crucial 5% mark for the first time since 2023, spooking investors about a possible downturn in stocks as bonds become more attractive. However, investors should remember why Warren Buffett once called bonds a “terrible investment”.
The sharp surge in bond yields came as traders increasingly expect the Federal Reserve to keep interest rates higher for longer, after soaring oil prices revived fears of renewed inflationary pressures. Inflation is already running well above the US central bank’s 2% annual target.
