Forget about a recession sinking the stock market. Rising rates threaten to spoil the party just like they did in 2022.

• Yields on 10-year Treasury yields have surged well above 4%.
• This creates increased competition for stocks, which are riskier than Treasurys. 
• With both stock valuations and interest rates high, stock prices could continue to fall.

Stocks have surged in recent months as the US economy has proved resilient: job gains remain positive, the unemployment rate is remarkably low, and GDP is expanding. 

But as investors have celebrated the growing likelihood of a soft-landing outcome — where the economy avoids a recession — another threat to this year’s rally has emerged in the form of rising interest rates.