The US Treasury yields have been on the rise as the prospect of economies emerging from year-long lockdowns have sparked inflation fears.

Jeff Chowdhry, Chairman of RLC Ventures on Thursday said that US bond yields are the ultimate barometer of risk around the world and one needs to be extremely cautious as US bond yields continue to rise.

“US bond yields is the ultimate barometer of risk around the world. If the US bond yield is going up, people are cautious, FIIs are cautious as we have seen in the selling in the last few days. In a scenario where yields are going up, they sell growth stocks, they sell emerging markets, and they sell India. So, I am afraid my view is the same as it was a month ago, that US bond yields will continue to go up despite what the Fed Chairman said yesterday. As a result, one should be cautious in this environment, not necessarily on a daily view, but certainly on a view of 3-6 months one should be very cautious of the market,” he said in an interview to CNBC-TV18.

Chowdhry believes that NASDAQ and India are the two areas that will suffer the most because of the rising US yields.

“If you think about a global fund manager or an FII fund manager, the two biggest over-owned asset classes in equities at the moment are NASDAQ, US technology stocks, and within emerging markets India. So, if US bond yields are going up, the two areas which are going to suffer the biggest pain of those two growth areas is NASDAQ where we have seen a reduction from the high and it continues to fall, and India. India is an extremely over-owned market by FIIs. I can’t say anything about the domestics and what they will do, but the FIIs will continue to sell this market as US bond yields go up,” he said.

Andrew Holland, CEO of Avendus Alternate Strategies said, “In India, there is selling as people have seen a reasonable rise in the short term. So, just taking some money off the table. But what I think foreign investors also will be thinking about is if the reflation trade is on, then India is a good play on that in terms of the domestic economy. So, I am a little less worried in the short term.”

Watch the video for more.

(Edited by : Abhishek Jha)