Ray Dalio Warns Stocks' Yield Cushion Is Shrinking as Bond Bear Market Has Further to Run
Updated
Updated · CNBC · Oct 8
Ray Dalio Warns Stocks' Yield Cushion Is Shrinking as Bond Bear Market Has Further to Run
3 articles · Updated · CNBC · Oct 8
Summary
Ray Dalio said equities are losing the return cushion that has helped them withstand rising bond yields, leaving stocks more exposed as financial conditions tighten.
Multi-decade-high Treasury yields, large government deficits, persistent inflation and heavy AI-related borrowing are pushing rates up while narrowing stocks' advantage over bonds.
Dalio said investors should watch free cash flow rather than earnings alone, warning cash generation may deteriorate even if third-quarter profit growth still looks solid.
Credit spreads are already starting to widen, he said, though conditions have not yet tightened enough to sharply curb credit or spending.
The Bridgewater founder expects the global bond sell-off to continue as governments and companies compete for capital, eventually weighing on growth and spilling into equities.