5% Yields, $120 Oil, VIX 25? The Market’s Nightmare Scenario Is Coming Into View

The 5% tension

The bond market is becoming impossible to ignore. The 10-year is approaching 5%, while surging oil and rising agriculture prices add fresh inflation pressure. Volatility has started to respond, with VIX waking up and the downside tail being aggressively repriced.

But the setup is not straightforwardly bearish. Tech bubbles can overpower rising yields, shorts are building and the institutional crowd remains cautious.