Stocks may drop 25% if the 10-year T-yield rises to 4.5%

Bloomberg report dated Feb. 25 talks about Investment Bank Goldman Sachs' view on the impact of a pick up in Treasury yields on the US economy and stock markets. 

Key points

A rise in rates to 4.5 percent by year-end would cause a 20 percent to 25 percent decline in equity prices.

Goldman’s base-case scenario calls for a 10-year yield of 3.25 percent by the end of 2018, though a “stress test” out to 4.5 percent indicates such a move would cause stocks to tumble.