An AI bubble is no longer Wall Street’s biggest fear. This market risk just took its place.

Bank of America's latest global fund manager survey shows that a "disorderly rise" in bond yields has overtaken an AI bubble as the market's most-cited tail risk. The shift reflects how quickly concern can move from equity valuations to the plumbing of the financial system.

The distinction matters. An AI bubble would largely be felt in technology stocks, but a disorderly move in yields would transmit through every asset class. Yields underpin borrowing costs for governments, companies, and households, and they set the discount rate used to value future earnings. When yields rise in an orderly way, it usually signals stronger growth. When the move is disorderly — fast, volatile, and hard to explain — it can tighten financial conditions abruptly and pressure both stocks and bonds at the same time.

What to watch: the pace rather than the level of yield changes, the term premium demanded by investors for holding long-dated debt, and whether any rise is driven by growth expectations or by fiscal and inflation worries. Those drivers tend to produce very different market outcomes.