6% Treasury yields are the biggest risk facing stocks right now. Here’s why.

The global bond-market rout that pushed major U.S. indexes toward a third straight day of losses on Tuesday has brought a familiar concern back into focus: the prospect of Treasury yields approaching 6%. With yields climbing, investors are recalibrating what they are willing to pay for future corporate earnings.

Higher government bond yields matter for stocks for two primary reasons. First, they raise the discount rate applied to future cash flows, which reduces the present value of equities. Second, they offer investors a low-risk alternative income stream, making stocks relatively less attractive. Rising yields can also feed into higher borrowing costs for companies and consumers, potentially squeezing profit margins and dampening economic activity.

What to watch now is whether the move in yields stabilizes or accelerates. Upcoming inflation data and central-bank commentary will be key signals, as will early corporate earnings reports for any signs of strain. The relationship between bonds and stocks is likely to remain sensitive in the near term.