US treasury yields have been creeping up. What's the repercussion?

 

The US 10-year yield has been creeping up from 0.67% (28 Sep) to 0.98% (10 Nov) which is a whopping 46% increase.

The 10-year yield is the risk-free rate and is used as the discount rate or factor in many financial models (DDM, DCF, CAPM, etc).  The asset values which are derived from the aforesaid financial models will be impacted because the ever-increasing discount rate will cause the valuations to fall since the future incomes are discounted to present values.

If a company's profitability is not rising faster than the risk-free rate, then the company's stock valuation will have to fall due to the higher discount rate.  This is something we need to watch out for.