Forget AI: the stock market has a new risk to worry about

Rising bond yields are becoming the main market risk, according to a Bank of America Global Fund Manager Survey. The share of managers citing this as a tail risk jumped to 33% from 27% in August, surpassing AI as the top concern. The article points to sharp moves in government yields: the US 10-year Treasury yield reached 5,04% this week, its highest level since 2007, while UK gilt yields were near 6% per a social post from Liz Truss. Higher yields pressure equities for two reasons—investors demand more return from stocks and borrowing costs rise, weighing on corporate spending and profits. It cites AI-related debt funding as an example of projects that look better at low rates. The piece notes possible hedging via insurers, naming Admiral as an example portfolio holding and discussing Chubb (NYSE: CB), where Berkshire Hathaway owns about 9,3%. It cites Chubb’s combined ratio strength and a price-to-book multiple of 1,75, but warns earnings can swing quickly after mispricing or a heavy catastrophe year.