Strategists from Société Générale indicate that U.S. Treasury bonds appear to be a more attractive investment compared to U.S. stocks, as rising yields pose a risk to the equity market.

They note that when the 10-year Treasury yield exceeds 4.5%, the relationship between stock returns and changes in bond yields turns strongly negative.

The U.S. equity risk premium is approaching the critical threshold of 3%, a level historically associated with impending stock market corrections.

They stated, "U.S. stocks seem to have limited capacity to absorb further increases in bond yields."

Upward revisions to earnings expectations are insufficient to offset the effects of rising stock prices and higher bond yields.

The strategists pointed out that the cost of equity in most markets for 2026 has not decreased. The driving force behind rising stock prices is earnings growth, not an expansion in valuation multiples.