US yields surge to two-decade high

US Treasury yields rose to their highest level in nearly two decades on Tuesday, and equities slipped after the move. Analysts said the rise prompted a pullback in large-cap indexes and a rotation toward value stocks as investors reassessed how higher rates affect future earnings.

Strategists warn on valuation risk

Portfolio strategists and sell-side analysts have issued increasingly cautious notes this week, saying rising yields raise discount rates and reduce the present value of earnings for long-duration companies, officials said. That pressure has been most visible in high-multiple growth names, which have outperformed through much of this year's rally.

Some institutional investors face constrained flexibility, analysts said, and that could accelerate position changes if rates remain elevated. Economists said the shift in fixed-income pricing can make bonds relatively more attractive and prompt de-risking by funds that target specific duration or volatility profiles. Credit spreads have remained contained so far, officials said, which suggests the move is more a re-pricing than a liquidity event.

Investors will watch market flows into September 16, 2026, for signs of follow-through and for scheduled Treasury issuance later that week, analysts said. The key question is whether equity breadth recovers if yields stabilise or whether a sustained rise forces a deeper re-rating of valuations.