US Stocks Invulnerability a Concern | 3-Minute MLIV
Speakers
Mark Cudmore
— Executive Editor, Bloomberg Live / Macro Strategist
Summary
Mark Cudmore warns that US stocks are becoming invulnerable to shocks, setting up a bubble risk. He argues that US 10-year yields must rise above 4.50% and UK gilt yields need to be higher due to persistent inflation. The video also touches on market mispricing of central bank rate paths.
- US stocks are seen as increasingly invulnerable, raising bubble concerns.
- 10-year Treasury yields are expected to rise above 4.50% based on the Fisher equation.
- UK gilt yields are too low given persistent inflation in the UK.
- The front end of the US yield curve is excessively optimistic about Fed rate cuts.
- Markets overestimate ECB and BoE rate cuts while underestimating Fed hikes.
- Oil prices are monitoring Middle East tensions, but equities remain focused on AI.
Trade Ideas
US stocks set for bubble risk
US stocks are becoming increasingly invulnerable to negative shocks, but equity multiples are stretched and there is no earnings recession in sight, setting up a bubble risk. This warrants caution even though we are not in a bubble yet.
10-year yield must go higher
Based on the Fisher equation, nominal growth is around 5% (real growth 2.5-2.7% plus inflation 2.5%), so the 10-year Treasury yield needs to be higher than 4.50%. The front end at 4.05% is excessively optimistic as the Fed must raise rates due to persistent inflation.
UK gilt yields need to rise
UK gilt yields have rallied recently, but the persistence of UK inflation and the Bank of England's likely terminal rate around 4.10% suggest that the two-year yield at 4.25% is too low. Yields need to be higher to reflect inflation persistence.
Up Next
This Bloomberg Markets video, published June 01, 2026, features Mark Cudmore discussing SPY, 10-Year Treasury Yield, UK Gilt Yields. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mark Cudmore · Tickers: SPY, 10-Year Treasury Yield, UK Gilt Yields