Stocks Battle Rising Yields and Await Tech Earnings

Global stock markets are struggling as bond yields continue to rise, with investors demanding higher real yields and term premia. The market is pricing in a new normal for rates that is above the Federal Reserve's target. Concerns over the scale of U.S. borrowing and a $1.695 trillion budget deficit for fiscal 2023 are also weighing on investor sentiment. The Bank of Japan is reportedly discussing a further tweak to its yield curve control policy. Tech giants such as Microsoft, Alphabet, Amazon, and Meta are set to report earnings this week, and higher bond yields are testing equity valuations and could lead to market pain for companies that miss earnings expectations.