U.S. 10-Year TIPS Yields at 2.36%, Signaling Stock Market Headwinds: Jefferies

According to Jefferies strategist Desi Peramunetilleke, 10-year U.S. TIPS yields at current levels signal potential headwinds for global equities. Historical data from the past 30 years shows that when TIPS yields exceed 2% (above the 70th percentile), global equity returns have underperformed. Specifically, when TIPS yields reached the 70–100th percentile range since 1997, the S&P 500 averaged just 0.2% monthly returns, while Japanese equities posted a 0.5% monthly loss. Current 10-year TIPS yields stand at 2.36%, and Peramunetilleke expects them to remain elevated near 2.5%, driven by fiscal concerns and elevated long-term borrowing costs from major technology companies' AI infrastructure investments.
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