The stock market and the bond market are telling two very different stories…

and it’s not a tale U.S. investors can afford to ignore.

Because when markets send mixed signals, portfolios don’t always behave the way investors expect.

In a recent note, analyst Dan Denning, a veteran macro commentator at Bonner Private Research, highlighted the growing disconnect: Bond yields are rising and signaling stubborn inflation. Stocks, meanwhile, are still priced for lower rates ahead.

“Judging by what people are doing with their money (buying stocks when nearly every single valuation metric is off the charts), there is still a strong belief/hope/prayer that something, anything, is going to bring both inflation and bond yields down so stocks can remain on their Permanently High Plateau,” Denning writes. “But for right now, and for investors, listen up. Bonds are warning you.”

Denning goes on to show that bonds are pricing in ten years of this inflation with higher yields and lower prices. Stocks are not:

If rates stay higher than many stock investors expect, the impact can show up like this:

• Growth-focused portfolios may lag…
• Expensive stocks can reset lower…
• Long-term bonds may not cushion swings like before…
• Rate-sensitive sectors can feel pressure…
• Borrowing and refinancing stay costly…
• Market swings get sharper…
• Stock picking matters more than market momentum.

I asked Sarah Cicero, CFP^®, CFA^®, President and Managing Partner at StoneBridge Advisors and registered representative of Osaic Wealth Inc., for her take.

She agrees with Denning; the disconnect is real:

“Bonds are clearly pricing in a world of higher inflation and rates, while equity markets continue to trade as if we are on a path back to low inflation and easy financial conditions.”

Cicero notes that measures like five- and ten-year break-even inflation rates are still running well above pre-pandemic levels. It suggests many investors are not expecting a clean return to the old 2% inflation world.

Cicero says the practical takeaway for investors is this:

Instead of trying to guess at whether stocks are wrong and bonds are right, focus on reevaluating portfolios built on a single assumption.

She emphasizes balance and intention, including:

• Diversification across asset classes and styles.
• Being deliberate about duration exposure – since long-term bonds tend to hedge recession and deflation risk, not just rate moves.
• And in equities, focusing on businesses with pricing power, strong balance sheets, and steady cash flow.

With so many moving parts, she says flexibility and liquidity – the ability to adapt – matter most.

If you’d like, you can connect with a pre-vetted, independent adviser in the WorthNet network – including Sarah Cicero and her team – by clicking the button below.

WorthNet itself doesn’t provide advisory services and is not a client of StoneBridge Advisors or the other advisers; rather, we are compensated for promoting certain advisers in our network and we have a financial incentive to recommend these advisers, which creates a material conflict of interest.

Sarah L. Cicero, CFP®, CFA®

President & Managing Partner of StoneBridge Advisors

Strategic Planner, Your Investment Partner

Sarah L. Cicero is President and Managing Partner of StoneBridge Advisors, where she leads a team of advisors who help individuals and families build structured wealth management plans that balance growth, risk, and flexibility. StoneBridge Advisors* (CRD #23131) is a proud member of the WorthNet partner adviser network.

Ready to Connect with a Financial Adviser?

Let’s Get Started.

Find Your Adviser »

Last Revised: April 22, 2026