GS: Decline between 20 and 25% for US indices with 10-year interest rates at 4.5%

If 10-year interest rates reach 4.5 percent by the end of the year, stocks may see a sharp decline, according to the US investment bank Goldman Sachs Group Inc.
Stress tests made by the bank indicate that raising interest rates to 4.5 percent would trigger a serious fall in indices, according to analyst Danuan Sturvenen. He also commented that under such a scenario, the US economy would likely be seriously delaying, but would hardly get into recession.
An increase in interest rates to 4.5% by the end of the year would result in a 20 to 25% decline in stock prices, the analysis said.
While the recent decline and correction of the indexes are largely predetermined by the rise in 10-year bond yields, interest rates are expected to continue rising to 3.5 or 4%.
A drop between 20% and 25% in indices, from their peak at 2 872.87 points, would mean a drop to around 2 155-2 298 points. The indices ended last week at 2,747.30 points.
The broad US index, however, reached the lowest value of 2 581 points on 8 February.
If Goldman's scenario materializes, that would mean a long way down for the US indices.