"That is a big valuation disconnect, that will continue to keep people invested in bonds," said Greg Peters, Senior Investment Officer at PGIM Fixed Income in Newark, New Jersey.
These twin challenges for equities could be mitigated, however, should the economy continue to improve. A climb in rates and the dollar are hallmarks of economic growth, provided
the increases happen at a steady pace.
"This economy is in good shape in our view," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
"So, rates are rising for the right reasons and the economy is proving that, and that should be a potential positive for equities."
This article was provided by Reuters.