Chris Wood, Jefferies Global Head of Equity Strategy, told CNBC‑TV18 that the US 10‑year Treasury yield has just crossed 4.6%, a threshold he likened to a yellow traffic light for financial markets. The move, from 4.4% at the start of the month, is already nudging bond traders to tighten spreads as the yield curve steepens.
Wood linked the yield uptick to a potential gold rally, saying that a 4.6% yield is the tipping point after which the dollar could weaken and gold price could surge to $10,000 per ounce. He noted that such a price would “massively monetize Indian household balance sheets” and could lift the bullion market into a new high.
He warned that the fastest return of foreign capital into India would come only if the AI and semiconductor capex cycle imploded. The analyst said that the current cycle, driven by US hyperscalers, is likely to generate capital destruction rather than returns, creating a drag on India’s small‑ and mid‑cap valuations.
Sector‑wise, Wood stressed that any rise beyond 5% in the 10‑year yield would be a red signal for equities, especially in high‑beta tech and semiconductor stocks. He added that the sector average PE is already stretched, and a further yield hike could trigger a correction.
Looking ahead, Wood cautioned that the AI capex cycle could collapse if credit markets decide to pull back, which would ripple through global equity markets. He urged investors to monitor Treasury yields, AI spending trends, and the trajectory of Chinese oil demand as key levers for next‑quarter volatility.