The 10-year U.S. Treasury yield crossed the 5% threshold as higher interest rates and geopolitical risks contributed to increased market volatility, according to Bank of America's latest fund manager survey released on September 16, 2026 [1]. Despite these headwinds, investors remain overweight global equities and optimistic about earnings, with a net 49% of money managers reporting overweight positions in global equities for September. This survey, which polled 170 investors overseeing a collective $470 billion in assets, also found that expectations for double-digit earnings-per-share growth over the next 12 months are at their highest since August 2021, and 38% of respondents anticipate a global economic 'boom' in the coming year [1].
Global government bonds extended their sell-off after the U.S. 10-year Treasury yield breached 5%, while oil prices have remained above $100 a barrel due to ongoing supply shocks from the Iran war [1]. Despite these pressures, equities have performed strongly in 2026, with the S&P 500 up more than 10.8% year-to-date, the Nasdaq Composite up 11.8%, and the Dow Jones Industrial Average up 8.4%. Stock markets in South Korea, Japan, and Europe have also rallied [1].
The Bank of America survey noted that while the 'excess bullishness' seen over the summer has faded, investors are still broadly optimistic about growth and earnings, with most expecting continued heavy spending on artificial intelligence (AI). Allocation to bonds is at its lowest level since May 2022, reflecting a preference for equities despite market volatility and warnings from leading AI voices about the need for safeguards in the sector [1].
Strategists at the BlackRock Investment Institute stated that rising bond yields have not changed their pro-risk stance, though they are 'raising the hurdle for returns.' They emphasized that higher rates and strong equities are not necessarily contradictory, especially when higher yields reflect stronger investment and growth. BlackRock maintains its overweight positions in U.S. equities and AI, believing that AI-related investment can support growth and profits even as the cost of capital rises [1].
CONCLUSION
Despite surging bond yields and oil prices, investors remain optimistic about global equities, supported by expectations for strong earnings and continued AI investment. Market participants are reducing bond allocations and maintaining overweight positions in stocks, with leading institutions like BlackRock reaffirming their pro-risk outlook. The overall market sentiment remains positive, though volatility persists.