The Equity Market’s AI Crutch Wobbles Under Rising Yields

Higher oil, higher yields, and equities pushing to fresh records make for an unstable mix.

Key Takeaways

• The Bond Market’s Oil Reflex Looks Too Simple: The bond market may be overreacting to the oil shock by treating it as a straightforward rate-hike story. Central banks cannot fix supply shocks with monetary policy; they can only cool demand and manage inflation expectations. As long as expectations remain anchored, policymakers have room to look through part of the oil-driven inflation impulse rather than rush into a more hawkish stance.