The bond selloff is rattling investors, but here’s why they shouldn’t expect a deeper stock downturn

The recent bond selloff has investors on edge, but according to Mark Newton of Fundstrat, it's not a cause for panic. Newton points to technical evidence that suggests the stock market may not be headed for a deeper downturn, despite surging bond yields. This is a reassuring message for investors, as bond yields have been rising rapidly in recent weeks, sparking concerns about the impact on equities.

The bond selloff is significant because it can have far-reaching implications for the broader financial markets. When bond yields rise, it can lead to higher borrowing costs for companies and consumers, which can in turn affect economic growth. However, Newton argues that the current technical indicators don't suggest a more severe stock market decline is imminent. This is worth noting, as some investors have been worried that the bond selloff could trigger a repeat of the 2020 market crash.

Looking ahead, investors will be closely watching the yield on the 10-year Treasury note, which has been a key benchmark for interest rates. If yields continue to rise, it could put pressure on the stock market, particularly if investors start to expect higher inflation or a more aggressive monetary policy response from the Federal Reserve. For now, though, Newton's comments suggest that investors may be able to breathe a sigh of relief – but they should still keep a close eye on bond yields and their potential impact on the markets.

Originally reported by marketwatch.com. BondNews adds analysis for finance & markets readers.