As borrowing costs continue to rise, experts are warning of a potential stock market correction, underscoring the widening disconnect between equities and the bond market. Amundi‘s Chief Investment Officer, Vincent Mortier, warned that a market correction is inevitable. Mortier pointed out a shift in narratives within the equity market over the past six weeks, contrasting with bond investors’ focus on the surge in prices for commodities like diesel, petrol, and jet fuel due to Iran’s closure of the Strait of Hormuz, the Financial Times reported on Tuesday.



&#34;We will see a correction — the question is more when than if, in my opinion,&#34; said Mortier.



Raphaël Thuin, Head of Capital Markets Strategies at Tikehau Capital, expressed concern over the incompatibility of equities at all-time highs and high interest rates and energy markets pricing in a lasting impact on the economy. Thuin suggested that the market is due for a pause.



&#34;Short-term, there are good reasons to be nervous,&#34; he warned. 



<div>




Read Also:

Michael Burry Says Today's AI Debt Bubble Mirrors The Dot-Com Era




</div>


<h2>Bond Rout Threatens AI-Led Rally</h2>



A government bond sell-off has driven U.S. bond yields to their highest levels in over a year, as investors fear oil prices above $100 a barrel will fuel inflation and prompt central banks, including the Federal Reserve, to raise interest rates. However, the S&amp;P 500 has continued scaling record highs, fueled by a tech-led rally that began in April after reports of a temporary Middle East ceasefire.



The 10-year Treasury yield has risen 0.28 percentage points since the ceasefire began amid a broader global bond sell-off, while a key market gauge of inflation expectations, the one-year inflation swap, climbed above 4% for the first time since early 2025.



The potential for a market correction comes as the Federal Reserve signals a possible rate hike by December. Meanwhile, economist Peter Schiff has warned of a brewing bond market crash, with U.S. Treasuries “breaking down” as yields surge. Despite the recent pullback in precious metals, Schiff said the broader market turmoil makes gold and silver attractive buying opportunities.



Despite these concerns, some market observers remain optimistic. Ed Yardeni, President of Yardeni Research, recently revised his year-end forecast for the S&amp;P 500, setting a new target of 8,250. This suggests that despite potential headwinds, there may still be room for equities to grow.



Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors



 Image via Shutterstock



<div>



Read Also:

Trump's Iran War Risks 'Unmoored' Inflation And 'Weaker Economy,' Warns Moody's Chief Economist As Ed Yardeni Sees July Rate Hike



</div>

.SPX

UPRO

SPXS

Experts warn that rising yields and bond market stress could trigger a stock market correction, with Amundi's Vincent Mortier stating it's a matter of 'when, not if.' Concerns arise over the disconnect between high equity prices and rising interest rates, as the S&P 500 continues to reach record highs despite a government bond sell-off. While some predict a pause in the market, others remain optimistic, with Yardeni Research revising the S&P 500 target to 8,250.

- Experts warn of a potential stock market correction due to rising borrowing costs and a disconnect between equities and the bond market.  
- Amundi’s Chief Investment Officer, Vincent Mortier, anticipates a market correction, suggesting that the timing is uncertain.  
- As bonds yield rises and inflation fears escalate, some analysts maintain a bullish outlook for equities, with S&P 500 targets being revised higher.

benzinga_article

S&P 500

iShares Core S&P 500

VG S&P 500

Pro UltrPro S&Pro 500

Direxion S&P 500 Bear 3X

SPDR S&P 500

Shutterstock

Moodys

Stock Market Has Good Reasons 'To Be Nervous' As Correction Risk Looms Amid Bond Rout, Warn Experts: 'Question Is More When Than If...'