Here’s why stock-market investors suddenly fear rising bond yields

It would be fun to be reincarnated as the bond market because “you can intimidate anybody,” Democratic political strategist James Carville once quipped.

A bond market selloff that pushed long-dated yields to more-than-seven-year high arguably appeared to give stock-market investors a fright this week.

In our call of the day, economist Oliver Jones of Capital Economics argues that investors are right to be worried and that the market action shows they are starting to factor in the prospect of a U.S. economic slowdown in response to tighter monetary policy by the Federal Reserve. That slowdown, which he expects to take hold in 2019, would also promise to drag down stocks and bond yields.

There was no clear catalyst for the Wednesday selloff that sent the S&P 500 SPX, -2.06%  and the Dow Jones Industrial Average DJIA, -2.13%  to their biggest one-day drops since February and the tech-heavy Nasdaq Composite COMP, -1.25%  to its biggest plunge since June 2016. And that selloff was followed by another rout Thursday that left the Dow with a 2-day loss of nearly 1,400 points.

Read: Why the stock market just ushered in its worst start to October since 2008

But a number of investors and analysts have argued that the stock market’s October weakness marked investor unease over a long-delayed jump in long-dated bond yields — a jump that briefly took the yield on the 10-year Treasury note TMUBMUSD10Y, +0.34%  above 3.25% for the first time since 2011 on Tuesday. Yields and debt prices move in opposite directions.

To be sure, bullish investors argue that rising yields shouldn’t yet be a major headwind for stocks as the increase in part reflects a growing economy.

And Jones observed that, until recently, rising Treasury yields indeed tended to coincide with a rising S&P 500 and outperformance by

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