Fidelity's Timmer Warns Rising Rates Can Hurt Stocks Unless Earnings Keep Pace

On Oct. 30, Jurrien Timmer, Fidelity Investments’ director of global macro, posted on X that rising rates can erode stock valuations unless earnings growth offsets them, and he sees no bubble now if profit margins and credit spreads hold. The 10-year Treasury yield climbed back above 5% on Oct. 29 to 5.05%. Fidelity’s chart put the high-yield bond spread—the extra yield over Treasuries—at 3.37 percentage points, up from a low of 2.67, a level whose further widening would expose equity and high-yield holders. Fidelity’s September note put the forward price-to-earnings multiple near 19 with expected earnings growth near 20%, and Timmer said yields near 6% could imply a multiple closer to 16.