Following a robust rebound over the past year, the upward momentum in global equity markets is facing a reassessment. Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, points out that with the S&P 500 already up 12% year-to-date, investors need to moderately dial back their future return expectations. He anticipates that, assuming economic growth continues, returns across most markets will revert to the mid-to-high single-digit range over the next twelve months. This does not imply an impending bear market; rather, it signals that asset prices are moving past the previous phase of highly elastic, explosive gains and transitioning into a more moderate upward trajectory.

Coinciding with the cooling equity outlook is the severe adjustment currently underway in the global government bond market. Recently, long-term government bond yields across multiple nations have surged in tandem. In the U.S., the 10-year and 30-year Treasury yields have reached their highest levels since 2023 and in nearly two decades, respectively. This bond rout extends well beyond the United States: Japan's 10-year government bond yield has breached 3% for the first time since 1996, while the 10-year yields in the U.K. and Germany have climbed to levels last seen in mid-2007 and during the 2011 European debt crisis, respectively. As core benchmarks for global borrowing costs, this collective rise in long-term interest rates will directly transmit to end-consumer credit markets, including mortgages, auto loans, and credit cards.

Although risk assets have temporarily absorbed the shock of rising interest rates this year amid a relentless hunt for yield, institutional experts warn that history shows the stock market cannot indefinitely ignore a high-rate environment. Matt Maley, a strategist at Miller Tabak, emphasizes that the suppressive effect of rising yields on equity valuations could crystallize at any moment. When the bond markets of the four major economies—the U.S., Japan, the U.K., and Germany—experience simultaneous selloffs, it typically reflects deep-seated market concerns regarding sovereign debt management, inflation prospects, and fiscal sustainability. In the current macroeconomic landscape, investor focus is gradually shifting from simply chasing the dividends of economic growth to scrutinizing how persistently rising borrowing costs will squeeze future asset valuations and compress the risk appetite.