Would you rather own stocks or collect 5.2% from Treasuries?

Rising rates have a lot of people asking this. So at what yield does it make sense to sell stocks and buy bonds?

It depends.

Historically, the level of Treasury yields alone has been a poor predictor of subsequent stock returns (even though it's a great predictor of subsequent bond returns). What matters more is what you're paying for earnings, and why rates are high.

High rates from strong growth and earnings? Stocks can do fine.
High rates from elevated inflation and weak growth? That's bad.

One historical study looked at starting 10-year Treasury yields vs. the S&P 500's subsequent 10-year annualized return:

<3% → 13.0%
3–4% → 9.4%
4–5% → 5.6%
5–6% → 6.6%
6–7% → 7.9%
7% → 14.9%

Counterintuitively, some of the strongest stock returns came when yields were highest.

The late 1990s make the point: 10-year yields ran 5–7%, yet the S&P 500 compounded near 29%/year from 1995–1999. Investors who thought a 6% yield was "too good to pass up" missed one of the best equity markets in history.

So I don't think there's a magic Treasury yield where investors should automatically rotate out of stocks. The better questions:

What's driving yields higher?
What are equities offering relative to the risk-free rate?
How expensive are stocks, and how strong are growth and earnings?
What is the right amount of risk for your situation?
Is it possible we’re entering a period of rapid growth with manageable inflation thanks to productivity gains from AI?

Time will tell!