(Kitco News) - Investors may be tempted by U.S. Treasury yields above 5%, but one prominent market strategist warns that rising borrowing costs represent a growing threat to both financial markets and the broader economy, creating an environment in which investors need to remain broadly diversified with exposure to gold and other commodities.
In an interview with Kitco News, Kristina Hooper, Chief Market Strategist at Man Group, said she is concerned about the rise in long-term bond yields, particularly given elevated U.S. government debt.
Higher yields can weigh on equity markets, particularly long-duration sectors such as technology, but Hooper said the risks extend well beyond stocks. She noted that higher borrowing costs become increasingly problematic when the government is already diverting a significant portion of its budget toward servicing its debt.
“When you're diverting so much of your federal budget to service debt, that is just not productive,” she said. “From a variety of different perspectives, it should be concerning.”
Hooper said that even if yields are rising partly because of stronger economic growth, higher rates still carry significant consequences for markets ...