Bond yields have risen sharply in the first few sessions of June, in a move that stocks have largely shrugged off. But if rates keep rising, two sectors could run into particular trouble.
The first is that classic rate-sensitive sector, the utilities, which are famous for their high dividend yields.
Utilities are "viewed as bond substitutes, and I think that could be a danger here," Boris Schlossberg, a macro trader with BK Asset Management, said in a Tuesday "Trading Nation" interview. "They could be very vulnerable going forward."
However, it's not just the utilities that may be in trouble. Erin Gibbs, equity chief investment officer at S&P Capital IQ, said higher rates could mean more volatility for housing-exposed stocks. When rates rise quickly, consumers tend to get less excited about buying houses, since financing become less attractive.