# Ray Dalio Says Stocks Have Less Room as Bond Yields Rise

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/28113
Published: 2026-10-08T13:37:06.000Z
Updated: 2026-10-08T13:37:06.000Z
Section: Investing

> The Bridgewater Associates founder expects free cash flow to weaken even as earnings improve, while a global bond-market sell-off continues.

Ray Dalio, founder of Bridgewater Associates, said Thursday that stocks are becoming more vulnerable to rising bond yields as their earnings advantage over bonds narrows and credit spreads widen.

Stocks have absorbed higher borrowing costs because earnings growth has supported expected returns, Dalio said. But rising equity prices and higher bond yields have reduced that cushion, leaving less room for markets to withstand further increases in rates.

U.S. Treasury yields hover near multi-decade highs as investors weigh large government deficits, persistent inflation and borrowing tied to artificial intelligence investment. Dalio said those pressures are contributing to a global bond-market sell-off that has further to run.

He also urged investors to focus on free cash flow rather than earnings alone. Companies can report improving profits while spending heavily on new investments without generating equivalent cash, creating an evolving liquidity issue.

Dalio expects corporate earnings to continue improving but said free cash flow will deteriorate. That divergence could increase pressure on companies and markets if borrowing costs remain elevated.

Dalio did not forecast falling earnings or an immediate correction in share prices. Financial conditions, he said, have not tightened enough to significantly curb credit and spending.

The broader bond-market pressure is being driven by governments borrowing to finance fiscal deficits and companies raising capital for emerging technologies. As governments and businesses compete for funding, higher borrowing costs could eventually force reductions in credit and spending, weighing on economic activity and equity markets.