When US 10-year yield jumps 0.5%, growth stocks drop 8-12% — automatically. Not magic, just math.
Duration: The Seesaw
Bond price moves inverse to yield. Long-duration bonds (10Y) fall ~8% if yield +1%. Stocks are long-duration too — their cash flows are far future, so they drop when discount rate rises. That's why tech (BBCA, GOTO) is more sensitive than coal.
Yield Curve Signals
- Normal (2Y <10Y): growth expected — buy equities.
- Flat/Inverted (2Y >10Y): recession fear — add bonds/gold, reduce margin.
- Steepening: recovery — rotate to banks/consumer.
What To Do (Simple)
If US 10Y >4.5% and inverted, don't leverage. Keep 30% bonds, DCA stocks, and wait. Curve inversion preceded last 5 recessions 10 months ahead.
Bottom line: Watch 10Y, not headlines. Yield is gravity for all assets.