(Bloomberg) -- US yields aren’t far from levels that would lure investors from stocks into bonds, according to the chief investment officer of Amundi SA, Europe’s biggest asset manager. 

“I think that the real alert level, one that can have a real impact, is 5%, and I think we can get there quite quickly,” said Vincent Mortier, noting how yields on US 10-year Treasury bonds had surged after Donald Trump won the US presidential race. 

The benchmark yield jumped as high as 4.48% following the Nov. 5 election, before retreating back to around 4.33% after the Federal Reserve cut its main interest rate by a quarter percentage point on Thursday. 

Rates markets show a high probability of a similar cut in December. Stocks have so far weathered higher US yields as the rise had been driven by resilient economic growth, Goldman Sachs Inc. strategists led by Andrea Ferrario wrote in a note this week.

US equity futures steady on Friday after yet another record high for the S&P 500 as investors piled into equities on hopes of corporate tax cuts and less regulation under a Trump administration. Mortier, however, is not convinced the upbeat mood will last. 

“We will probably take some profit in the coming days,” he said. While some of his firm’s funds had positioned themselves to gain from a Trump victory rally, caution is now more appropriate, he said.

A clampdown on immigration, new import tariffs, and comprehensive tax cuts are among the measures in Trump’s policy agenda that economists believe will fuel inflation. That might encourage the Fed to slow the pace of rate cuts in 2025.

The mounting pile of US national debt — which could expand further due to Trump tax cuts — is also expected to raise the premium investors will charge to finance the federal budget deficit. 

According to Mortier, yields could start rising to the “alert level” well before Trump is inaugurated in January, should he confirm or provide more details on his economic plans.

The US equity-risk premium, or the excess return that investing in the stock market provides over the risk-free rate, has fallen to its lowest level in more than 22 years, and is settling in negative territory, meaning stocks are objectively already less attractive than bonds. 

The US equity market is also getting very expensive. The S&P 500 is now trading at 22.5 times forward earnings, well above a long-term average of about 16 times.

The gap in attractiveness between bonds and strocks could widen further, Mortier said, citing a recent note by Goldman Sachs strategists that argued US stocks are unlikely to sustain their above-average performance of the past decade. 

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