6% Treasury yields are the biggest risk facing stocks right now. Here’s why.

A global bond-market selloff extended into Tuesday, pressuring major U.S. indexes for a third consecutive session. As Treasury yields climb—with the 6% threshold now viewed as a key psychological level—investors are reassessing the relative appeal of stocks versus bonds. The move reflects a broader rout in government debt worldwide, driven by concerns over persistent inflation and the path of central-bank policy.

Higher Treasury yields matter because they act as a discount rate on future corporate earnings. When yields rise, the present value of those future profits falls, making stock valuations harder to justify. Yields also compete directly with equities: a 6% risk-free return can look more attractive than uncertain stock market gains, particularly for long-duration and high-growth sectors.

What to watch now is whether the backup in yields stabilizes or continues to climb. Key drivers include upcoming inflation data, auctions of new Treasury supply, and any commentary from central-bank officials about the pace of rate cuts. For now, the bond market is setting the tone, and stock investors are watching the yield curve closely for signals about financial conditions ahead.