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As the bull market enters 2025, it faces a significant threat from rising interest rates, particularly the 10-year Treasury yield, which has jumped nearly 10% to around 4.573%. Historically, elevated yields lead to negative equity returns, and after a strong year, the S&P 500 ended December lower due to increased yields. The Federal Reserve’s recent indication to slow interest rate cuts has intensified this situation. Evercore ISI notes that despite a favorable economic backdrop, rising yields could pressure equities. As 2025 begins, both bond and equity market volatility are expected as investors navigate this complex landscape.
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