Bloomberg Surveillance · Tuesday, September 8, 2026
Jim Caron of Morgan Stanley Investment Management highlighted that equity markets are currently resilient to rising bond yields due to strong earnings growth, driven by nominal GDP. He argued that nominal GDP has risen more significantly than bond yields, creating a gap that equities can capitalize on, referencing strong second-quarter earnings as evidence.
“So what I think is very different right now is really just the earning story. And I'm going to go back to what I said in the beginning is it's a nominal GDP story because nominal GDP is what drives earnings.”
“So I think when an equity investor looks at what's happening in the markets, and yes, bond yields have risen, But nominal GDP has risen a whole lot more. And you could make the argument that nominal GDP has risen a lot and bond yields have a lot of catching up to do still before the rise in yields becomes restrictive and it breaks the equity markets.”
“Because even with yields rising, I mean, you know, look at second quarter earnings. I mean, yields rose and boy, second quarter earnings were pretty, you know, pretty strong.”