# VC10X Pulse - Why Bond Yields Are Rising Again (And What It Means for Investors)

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 11 Dec 2025, 5:16.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/112484848/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-11-11%2F414195735-44100-2-957f804fab439.mp3

Global bond yields are quietly climbing again in late 2025—even as central banks start cutting short‑term rates. In this video, we break down what’s actually happening in the bond market, why the 10‑year government bond is so important, and what higher yields could mean for stocks, startups, real estate, and your portfolio. Using simple charts and real numbers, we explain concepts like term premium, bear steepening, and duration in plain English, then walk through a few realistic scenarios for 2026 instead of doomsday predictions. Key Takeaways - Long‑term government bond yields in major markets have moved higher again, as investors demand more compensation for inflation and fiscal risk. - This raises the discount rate used to value long‑duration assets like growth stocks and startups, putting pressure on high multiples even if earnings look strong. - At the same time, short‑term bonds and cash‑like instruments now offer attractive yields, so investors finally have genuine fixed‑income alternatives to equities. Glossary – Financial Terms Explained - Yield: The annual return you earn from a bond, expressed as a percentage of its price. If price falls, yield rises, and vice versa. - Basis Point (bps): One‑hundredth of a percentage point. 50 bps = 0.50%. Useful for talking about small rate moves precisely. - Risk‑Free Rate: The yield on high‑quality government bonds (often the 10‑year US Treasury), used as the baseline return investors can get with very low credit risk. - Yield Curve: A line that shows bond yields from short maturities (e.g., 3‑month) to long maturities (e.g., 30‑year). It summarizes market expectations for growth and inflation over time. - Bear Steepening: A situation where long‑term yields rise faster than short‑term yields. It usually signals markets are worried about future inflation, debt, or growth risks. - Term Premium: The extra yield investors demand for locking money into long‑term bonds instead of rolling short‑term ones. It rises when there’s more uncertainty about inflation, deficits, or who will buy all the new debt. - Duration: A measure of how sensitive a bond (or stock-like asset) is to interest‑rate changes. Higher duration = bigger price swings when yields move. - Investment‑Grade Bond: Debt issued by governments or companies with strong credit ratings, viewed as relatively low default risk. - High‑Yield / Junk Bond: Debt from weaker issuers with higher default risk. They pay higher yields to compensate investors for that risk. - Discount Rate: The interest rate used to convert future cash flows into today’s value. When this rate goes up, the present value of distant cash flows (like future startup profits) goes down. SUBSCRIBE FOR MORE VC & STARTUP STRATEGY VC10X breaks down the most important stories in tech, startups, and investing every week. If you want actionable insights to help you build or invest in the next great company, subscribe now. LET'S CONNECT Website: https://VC10X.com X / Twitter: https://x.com/choubeysahab LinkedIn: https://linkedin.com/in/choubeysahab COMMENT BELOW How do you think this will play out in 2026? #BondMarket #InterestRates #Investing #StockMarket #Finance #Economics #FederalReserve #BondYields #10YearTreasury #MacroEconomics #MarketAnalysis #PassiveIncome #BearSteepening

## Transcript

[0:00] While the headlines are dominated by AI launches and
[0:02] tech valuations, the most important market in the world,
[0:06] the bond market, is sending a very different signal.
[0:10] In December 2025, we are seeing a synchronized rise in global
[0:14] government bond yields. In the US, the 10 year Treasury
[0:17] yield has climbed above 4.14%, rising 40 BPS in just one month.
[0:26] We see similar moves in Australia where yields rose to
[0:28] 4.51% and across Europe. This is happening despite the
[0:33] Federal Reserve cutting short term rates.
[0:35] This phenomena is called beer steepening and for investors it
[0:39] matters more than the daily stock market noise.
[0:42] Today we are going to look at the data to understand why
[0:45] yields are rising, what the term premium tells us about 2026, and
[0:50] how this impacts everything from startup valuations to real
[0:53] estate. So let's dive in.
[0:57] First, let's look at the facts. The Federal Reserve cut rates in
[1:01] December, which usually pushes yields down.
[1:04] But the opposite happened. Long term yields rose.
[1:08] Why the market is rising in two specific risks.
[1:12] First one, sticky inflation and growth.
[1:14] Economic data in late 2025 has been stronger than expected. the
[1:19] US labor market remains firm and inflation is proving sticky,
[1:24] meaning it isn't falling as fast as the central banks hoped.
[1:28] Bond investors are demanding a higher return, that is yield, to
[1:32] lock up their money for 10 years because they fear inflation
[1:36] might erode that value in the future.
[1:38] The second point is the term premium is rising.
[1:42] This is a key concept. The term premium is the extra
[1:45] compensation investors demand for the risk of holding long
[1:49] term debt. With U.S. government deficits
[1:51] remaining high and fiscal policy likely to stay loose globally,
[1:55] investors are worried about the supply of bonds.
[1:58] If the government issues more debt, the buyers demand a higher
[2:02] yield to buy it. That risk premium is expanding.
[2:05] This isn't just AUS story. If we look at Europe, German and
[2:10] UK yields rose 30 basis points in December.
[2:13] In Australia, 10 year yields hit 4.51%, given by higher local
[2:19] inflation data. In emerging markets, Brazil saw
[2:22] yields jump over 100 basis points in a single month at the
[2:26] central bank. Hide rates aggressively.
[2:29] The synchronization tells us that capital costs are rising
[2:32] globally. The era of easy money isn't
[2:35] returning as quickly as the equity market hopes.
[2:38] The bond market is effectively voting that rates will need to
[2:41] stay higher for longer to keep inflation in check.
[2:45] So why does this matter for you? First, let's understand how it
[2:49] affects the tech and startup valuations.
[2:52] Growth stocks and startups are long duration assets.
[2:55] Their profits are expected far in the future.
[2:58] When the risk free rate that is the 10 year Treasury rises, the
[3:02] discount rate used to value those future cash flows also
[3:06] rises. Mathematically, a higher
[3:08] discount rate lowers the present value of a startup.
[3:12] If you'll stay in the 4 to 5% range through 2026, we could see
[3:17] valuation multiples compressed regardless of the AI hype.
[3:21] The second reason is corporate debt.
[3:24] For companies carrying debt, refinancing is getting
[3:27] expensive. Investment grade spreads
[3:29] tightened in December, but high yield that is junk.
[3:32] Bond spreads are widening slightly, the signals that the
[3:36] market sees more risk for lower quality companies in 2026.
[3:41] The third reason is the cash advantage.
[3:43] With yields rising, short term bonds and cash equivalents
[3:47] remain competitive. You can get 4% yield with very
[3:51] low risk. For conservative investors,
[3:54] fixed income is finally offering real income again.
[3:58] Looking at 2026, there are two reasonable scenarios.
[4:01] Scenario A, the soft landing course, that is inflation slowly
[4:05] drifts down, allowing yields to stabilize in the 4% range.
[4:09] This is the Goldilocks outcome where stocks can perform well,
[4:12] supported by earnings growth. Scenario B is the bond vigilante
[4:17] shock. If governments continue massive
[4:19] deficit spending, bond buyers could go on strike, pushing
[4:23] yields towards 5%. This would tighten financial
[4:27] conditions rapidly and could cause a correction in risk
[4:30] assets, namely stocks, crypto, real estate, etcetera.
[4:34] The bottom line, don't ignore the bond market.
[4:37] Right now it is telling us that the fight against inflation
[4:40] isn't over and the cost of capital is going to stay higher
[4:44] than we got used to in the last decade.
[4:46] As an investor focusing on companies with strong cash
[4:50] flows, companies that don't need to borrow money, is the safest
[4:54] play in this environment. Let me know what you think how
[4:57] this will play out in 2026. Share your thoughts in the
[5:00] comments below. If you found this analysis
[5:03] helpful, subscribe for more deep dives into the data that
[5:07] actually moves market. We'll be back next week with
[5:10] another story from the front lines of global investing.
[5:13] We see the next.

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