Explainer: Why rising bond yields hurt equity markets
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New Delhi, Feb. 23 -- Over the past few days, a surge in bold yields has contributed to steep fall in equity markets. The Nifty and Sensex dropped around 2% on Monday, falling for the fifth consecutive session. Yield on the benchmark 10-year government bond on the other hand, climbed to 6.20% from around 5.80% levels at the start of the year.
Mint explains how the two concepts are related and what the connection is.
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Higher interest costs for companies: A rise in bond yields denotes higher interest rates in the economy. Higher interest rates push up the cost of loans taken by companies and makes it harder for them to borrow additional money to invest. This ultimately affects their prof...
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