Market Update 5th October 2026
News: 05 October 2026
In theory, there is no difference between theory and practice. But in practice, there is. The relationship between bond yields and stock markets is one such situation where things are more nuanced than they look. We’re told it is straightforward. Mathematically, a rise in yields means a fall in bond prices. A rise in bond yields and thus a fall in their price should cause a drop in the stock market. This largely reflects how investors need to earn a premium for taking the extra risk of investing in equities compared to the returns available on traditionally lower-risk choices like government bonds from a country like the UK or US.
