An AI bubble is no longer Wall Street’s biggest fear. This market risk just took its place.

Bank of America's latest global fund manager survey shows that concerns about a "disorderly rise" in bond yields have overtaken worries about an AI bubble as the market's most-cited risk. The shift is notable because it moves the focus from equity valuations to the plumbing of financial markets.

Yields matter because they set the baseline cost of borrowing across the economy and influence how stocks are valued. A gradual rise is often manageable. A disorderly one — sharp, volatile, and hard to anticipate — can tighten financial conditions quickly, pressuring rate-sensitive sectors such as real estate and utilities, and compressing the premium investors pay for future earnings.

For observers, the key question is whether the move reflects stronger growth expectations or rising fiscal and inflation risk. The distinction matters: growth-driven increases tend to be absorbed more easily than those driven by doubts about debt sustainability. Watch upcoming inflation data, central bank guidance, and auction demand as signals of which dynamic is at work.