Sep 30, 2026 · 1h 0m
Bond yields test stocks as investors hedge uneven risks
Will Higher Rates Kill the Stock Market? (EP. 484)
The episode weighs whether higher Treasury yields, fragile positioning, and private-credit stress could turn a hesitant sell-off into a deeper equity decline.
- 1Investors are reducing valuations across stocks without displaying the fear typically associated with a major market break.
- 2Bond purchases reflect a yield and risk-reward calculation, while a further rise in Treasury yields remains the key downside threat.
- 3AI agents could reshape personal finance and creative work, but autonomy, account access, and job losses remain unresolved risks.
Don't miss
Michael describes using Instinct as an AI agent for personal tasks, while Ben remains wary of giving autonomous software access to his accounts.
The brief
Michael Batnick and Ben Carlson examine a slow, uneven stock sell-off marked by broad valuation compression, weakening breadth, and a subdued VIX—doubt without outright fear.
Conflicting flows complicate the market signal: technology ETFs and Robinhood are attracting buyers while institutional positioning grows more negative, making sentiment surveys harder to interpret.
Both hosts explain why they bought bonds—not as a precise rate call, but because yields improve the risk-reward tradeoff if growth or inflation stalls.
The discussion widens from rent disinflation and housing affordability to private-credit redemptions, with a sharp warning that another rapid rise in the 10-year yield could hit stocks hard.
The most forward-looking detour concerns AI agents: Michael describes Instinct handling financial tasks, while Ben questions whether autonomous systems should access personal accounts.
What was said on this episode
23 statements · 14 positive · 8 negative · 1 mixed
The current market has substantial doubt but almost no investor fear.
“there's a lot of doubt, a lot of doubt, but basically zero fear”
Listen at 2:47
AI-exposed companies no longer trade at a valuation premium.
“there's no premium in the AI trade anymore”
Listen at 3:31
The stock market is currently highly concentrated in a small number of stocks.
“this is a very concentrated market now”
Listen at 7:18
Strong AI spending and economic growth could prevent rising rates from causing an equity sell-off.
“if rates are accelerating because it's like, oh my gosh, this thing has legs. It's an economic boom. That's why the stock market won't sell off.”
Listen at 8:21
The market may recover from current selling and rally through year-end.
“I would not be surprised if we get past this bout of selling underneath the market. underneath the indexes, and you get a rip until the year end.”
Listen at 9:11
The S&P 500 gained 19% annualized while Treasury rates rose from 0.5% to 5.2%.
“Since that date, the S&P 500 is up 19% annualized since rates went from 0.5% to 5.2%.”
Listen at 9:49
Investor flows are more informative than sentiment indicators.
“the flows matter way more”
Listen at 12:34
Bond purchases are justified by attractive yields and risk-reward, not rate timing.
“It's a risk-reward thing. I like the yield.”
Listen at 15:29
Ben is comfortable owning bonds yielding about 5%.
“I am very happy owning my 5% yields.”
Listen at 16:54
Bond yields are clearly rising, so investors should not fight the upward trend.
“they just haven't. Like they're clearly going up. The trend is higher. Don't fight the trend.”
Listen at 17:30
Three-month Treasury bills should perform well if the Fed continues hiking rates.
“if the Fed keeps hiking rates, those three-month T-bills don't have interest rate risk, and they'll do just fine, too.”
Listen at 17:53
Bonds should gain additional upside if inflation and economic growth stall.
“The thing is, bonds give you the kicker if and when inflation and growth stall. If they stall out, bonds are going to have a kicker.”
Listen at 18:11
Instinct can perform many personal-assistant tasks for users.
“It just does so many things for you.”
Listen at 31:04
Instinct is growing 10% daily and recently raised $1 billion at a $10 billion valuation.
“they're growing 10% a day. They just raised a billion dollars at a $10 billion valuation.”
Listen at 31:26
Personal AI assistants will achieve broad adoption.
“this thing is going to be adopted in a big way”
Listen at 33:30
Ben is highly optimistic about personal AI assistants.
“I am incredibly bullish on this category.”
Listen at 35:28
Homebuyers can no longer afford to overpay for housing.
“I don't think people can afford to overpay anymore.”
Listen at 37:16
Ben supports subsidizing first-time homebuyers.
“I have a 12% more year. Yeah, shut up, asshole.”
Listen at 39:05
The stock market will not collapse under current pressures.
“the market is not going to fall apart”
Listen at 41:15
A 10-year Treasury yield of 5.6% next week would trigger a major market decline.
“If the 10-year is 5.6% next week, I don't see how the market doesn't crap.”
Listen at 41:28
Declining entertainment spending will not return to previous levels.
“That's not coming back.”
Listen at 44:20
Continued rapid rate increases will force the stock market to decline.
“If rates keep going up at the pace they've been going up, the stock market has to fall off.”
Listen at 58:17
Investors would normally expect stocks to fall when 10-year yields rise from 4% to 5.3%.
“the 10-year is going from 4% to 5.3% this year in the first nine months of the year. What's the stock market doing? You'd say the stock market is down 15%, not up 15%.”
Listen at 58:29
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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