Oct 8, 2026 · 40 min · 13 segments
Today on the show - we’re answering your questions with topics ranging from the case for bonds as yields soar to tax on cash ISAs and pensions. Tom Stevenson is here to give the answers. Ed Monk…
Ed MonkHostWell, I mean, f- first of all, why, why would rising bond yields be, be bad news for the, for the equity market?
Uh, I guess the, the, the first way they do that is that they raise the cost of borrowing for businesses, but also for, for households.
So in that regard, they slow the economy, which is generally gonna be bad news for, for share prices.
The other way that they impact, uh, the stock market is that, uh, as the bond yield rises, bonds become a more attractive investment, uh, relative to, to shares.
So why has that not happened yet? Because, uh, you know, as the question points out, bond yields have risen quite a lot, uh, um, uh, recently.
I think the, the short answer is because, um, company earnings are still growing very fast.
And so that impact that I talked about of slowing the economy, raising the cost of borrowing, slowing growth, has not really kicked in yet.
And of course, one of the reasons for that is that we've got a big AI investment boom, which is driving, you know, a lot of big, uh, particularly American companies.
I mean, is it, is another way to look at this question that, that the bond markets and the equity markets are sort of looking different directions or, or, or reacting to the same information in different ways? Because the bond market clearly is worried about inflation-
Well, I mean, f- first of all, why, why would rising bond yields be, be bad news for the, for the equity market?
Uh, I guess the, the, the first way they do that is that they raise the cost of borrowing for businesses, but also for, for households.
So in that regard, they slow the economy, which is generally gonna be bad news for, for share prices.
The other way that they impact, uh, the stock market is that, uh, as the bond yield rises, bonds become a more attractive investment, uh, relative to, to shares.
So why has that not happened yet? Because, uh, you know, as the question points out, bond yields have risen quite a lot, uh, um, uh, recently.
I think the, the short answer is because, um, company earnings are still growing very fast.
And so that impact that I talked about of slowing the economy, raising the cost of borrowing, slowing growth, has not really kicked in yet.
And of course, one of the reasons for that is that we've got a big AI investment boom, which is driving, you know, a lot of big, uh, particularly American companies.
I mean, is it, is another way to look at this question that, that the bond markets and the equity markets are sort of looking different directions or, or, or reacting to the same information in different ways? Because the bond market clearly is worried about inflation-
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