BlackRock’s chief bond strategist breaks down the 3 reasons rising bond yields are whacking stocks

BlackRock’s chief bond strategist breaks down the 3 reasons rising bond yields are whacking stocks

At a time when bitcoin is soaring and day-traders are taking on hedge funds, bonds can seem pretty dull.

But the bond market has sprung back to life over the past few weeks and reminded investors just how important it is - with yields shooting higher and shaking faith in the stock-market rally.

Rising bond yields have triggered sharp falls in the Nasdaq, which is packed full of flashy stocks that soared when returns on bonds were ultra-low. Tesla had tumbled more than 30% over the month to Friday, with Ark's Innovation ETF down around 26% and Amazon off by roughly 12%.

But why exactly are rising bond yields worrying investors? We asked Scott Thiel, chief fixed income strategist at BlackRock - the world's biggest asset manager with more than $8 trillion under management - for some answers.

Investors are betting growth will drive inflation

Government bonds - ultra-safe securities that governments sell to borrow money - are the backbone of global markets, with the US Treasury market worth around $21 trillion.

In recent weeks, yields on bonds have risen sharply as investors have dumped government securities at a rate not seen since Donald Trump was elected in 2016. (Yields are the rate of return bondholders