Global stock markets have continued their strong run in 2026, extending last year’s rally as investors largely brush aside geopolitical tensions and persistent inflation concerns.

However, bond markets are telling a more cautious story, raising concerns among some investors about whether equities have become overly optimistic, as quoted on CNBC.

While several major stock indexes have recovered losses triggered by the Iran war, government bonds continue to reflect fears of higher inflation and prolonged interest rate pressures.

In the United States, the S&P 500 has gained 7.4% year to date and has risen nearly 7% since the Iran conflict began in late February.

Both the S&P 500 and the Nasdaq Composite reached fresh record highs last week before pulling back in recent sessions as rising Treasury yields pressured stocks.

Some Analysts See Correction Risks

Analysts at Barclays noted that stocks have staged one of the fastest rebounds in decades, with U.S. equity funds attracting $70 billion in inflows over the past seven weeks — a pace ranking in the 97th percentile since 2000, as quoted on CNBC.

However, the bank warned that positioning had become stretched.

The bank added that Commodity Trading Advisors, key drivers of the rebound, are now close to their maximum long positioning in U.S. equities.

Barclays also argued that rising yields and inflation concerns continue to keep heavy short positions in U.S. Treasuries, while equity investors remain vulnerable if bond yields move beyond levels that historically begin to weigh on stocks.

Wellington Management investment director Paul Skinner said the growing divergence between bond and stock markets leaves equities exposed to a correction, as mentioned in the same CNBC article.

Deutsche Bank Says Market Resilience Still Makes Sense

Despite mounting concerns, analysts at Deutsche Bank argued that the resilience in equity markets remains broadly consistent with historical market behavior.

The bank also emphasized that modern economies are less energy-intensive than in previous decades, meaning higher oil prices may not trigger the same level of economic disruption seen historically, as mentioned on CNBC.

Time for quality ETFs?

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