The US stock and bond markets are "severely diverging," and Wall Street warns of rising risk of a correction: Don't try to guess the top too easily.

According to Mars Finance, on May 19th, as US Treasury yields continued to climb, several large Wall Street asset management institutions began warning that the divergence between the US stock and bond markets was widening, and the market might face a correction risk. The report stated that since April, AI and technology stocks have driven the S&P 500 index to new highs, but at the same time, US Treasuries have experienced a sustained sell-off, with the 10-year Treasury yield rising to a more than one-year high. Market concerns are that the Middle East conflict and high oil prices will reignite inflation and force the Federal Reserve to maintain high interest rate policies. Vincent Mortier, Chief Investment Officer of Amundi, stated, "A correction in US stocks is only a matter of time, not a question of whether it will happen." He pointed out that current market sentiment, narratives, and positioning have undergone a "complete reversal" in just six weeks. Data shows that since the ceasefire announcement, the S&P 500 has risen by 12%, but the one-year inflation swap rate has broken through 4% for the first time since 2025, indicating that the bond market is repricing inflation risks. Raphaël Thuin, head of strategy at Tikehau Capital, stated that while the stock market is currently hitting record highs, credit spreads are narrowing, and the market is extremely bullish, the energy and interest rate markets are pricing in long-term economic shocks, creating an "irreconcilable contradiction." However, some institutions believe that corporate earnings are still supporting the US stock market. Giles Parkinson, head of equities at Trinity Bridge, stated that corporate earnings are currently "exploding," and the market's upward momentum is not yet over. One asset management executive summarized that the bond market has issued a "yellow alert" for high oil prices and persistent inflation, while the stock market is choosing to continue betting on optimistic expectations. "The market will continue to euphoria until the real disaster strikes."