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Rising bond yields and rising stock prices are sending the same message — a gusher of fiscal stimulus could help the economy grow faster. The expectation is that Democrats, now with control

of Congress and the White House, will approve even more fiscal spending than expected under a divided government. That would result in more debt issuance and higher inflation and higher

interest rates. Bond yields have been rising quickly in response, and that raises concerns about what level they can reach before they begin to sting the stock market. But that actually

might not be the right question to ask, some strategists say. "The answer is that rates can go substantially higher as long as they don't do it abruptly or in a disruptive fashion.

If we end the year and rates were 50 basis points higher, and they did it in a steady and stable way, that would be a sign the economy was healthy," said Jonathan Golub, chief U.S.

equity strategist at Credit Suisse. Golub said there is no specific level where rates become a problem, but in this market environment, a 3% 10-year yield might hit equities. Golub on

Thursday raised his 2021 target on the S & P 500 to 4,200 from 4,050 on the view that more stimulus spending will help the economy. The 10-year benchmark, which influences mortgage rates

and other loans, crossed the psychological 1% threshold this week, rising to 1.08% Thursday. It moved up to 1% early Wednesday as it appeared that the two Democratic candidates were on

track to win the Georgia Senate races, tipping the balance of power in the Senate. Democrats Raphael Warnock and Jon Ossoff won their races. "If we had a 1.5% interest rate right now

that in itself would not be problematic. If we get there in a very short time that causes the markets to adjust, that would be a problem," said Golub. "Everybody asks the same

question, but it's not the right question. There's not a magic number. ... We had an interest rate of 1.9% at the beginning of last year." Golub said it will be more

disruptive for stocks when yields are rising and the economy has shown so much improvement that the market's focus shifts to when the Fed could begin to consider moving away from its

easy policies. Periods of rising rates can parallel positive times for the stock market. "If you look at market performance over the last 10 years, more than 100% of the equity market

gains have come during periods when the 10-year yield was rising," said Paul Hickey, co-founder of Bespoke Investment Group. "We're at such ridiculously low rates that

it's somewhat representative of a bunker mentality on the part of investors. There's some room for higher rates which would indicate things would return somewhat back to

normal." Hickey said he expects that if yields were to rise gradually to 1.5% or 2%, the market would probably not be concerned. "Obviously, it's a function of how they get

there, the pace and the speed they get there with," he said. "Once you start getting closer to 2%, the market may get concerned about it." Higher yields could become worrisome

for stocks if they were making it much more expensive for corporations to borrow or if investors began to see yields on bonds as more attractive than stocks. Peter Boockvar, chief

investment officer at Bleakley Advisory Group, notes that the current yield on the S & P 500 is 1.6%. He said rising yields should help lift bank stocks, which can be more profitable in

a rising rate environment. Other cyclical stocks also should benefit, but there are sectors that don't do as well when yields are rising. "The rise in rates [Wednesday] definitely

led to the rotation out of technology stocks and going into other things, so you can argue that at least the 1% level raised peoples' focus on valuations of tech," Boockvar said.

He said high multiple stocks are more vulnerable when rates rise. Boockvar said the bond market is sending another message — about inflation. The 10-year breakeven, an inflation measure,

rose to 2.1% Thursday, up 3 basis points in one day, but up more than 10 since the beginning of the week. Many strategists expect to see a transitory pickup in inflation later this year, but

the bond market has been more aggressively pricing rising inflation this week. Some economists expect inflation to rise as the economy recovers, but it should be fleeting. The 2.1%

breakeven level suggests the market expects an average rate of inflation of that over the next 10 years. "You're talking about more than a 2-year high in inflation expectations.

Over 2.20 would be 2014 levels," said Boockvar. "If it continues, it's a P/E killer." Traders work on the floor of the New York Stock Exchange. NYSE Rising bond yields

and rising stock prices are sending the same message — a gusher of fiscal stimulus could help the economy grow faster. The expectation is that Democrats, now with control of Congress and the

White House, will approve even more fiscal spending than expected under a divided government. That would result in more debt issuance and higher inflation and higher interest rates. Bond

yields have been rising quickly in response, and that raises concerns about what level they can reach before they begin to sting the stock market. But that actually might not be the right

question to ask, some strategists say.