Piper Sandler flags defensive stocks that may benefit as U.S. Treasury yields rise

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Defensive stocks as yields rise

Highlights

Piper Sandler highlights Genuine Parts Company (78% correlation to the 10-year Treasury yield) and Conagra Brands (75%) as defensive picks for rising-rate environments.
Despite Genuine Parts Company and Conagra Brands trading about 40% below recent highs, analysts remain constructive as elevated yields could offer relative support.
Arch Capital Group, Cigna Group, and Everest Group insurers are identified as beneficiaries of rising yields since they can increase premium rates as interest rates climb.

Rate-sensitive stock picks in focus

Piper Sandler says some defensive equities are positioned to perform relatively well in a higher-rate environment, as bond yields increasingly shape stock market leadership. The firm says stronger macro and earnings conditions are helping equities absorb some pressure, but higher oil prices and interest rates have weighed on broader market participation since late February.

Michael Kantrowitz writes that higher equity risk premiums are offsetting wider earnings-per-share revisions and growth, limiting the market's ability to broaden out. He adds that lower rates are likely needed for a broader equity rally and for any meaningful index gains from current levels.

The U.S. 10-year Treasury yield is last at 4.59%, while the 30-year Treasury yield trades at 5.12%. A day earlier, the 30-year yield moves above 5.19%, its highest level since July 2007, underscoring why rate risk is again a central market concern.

Defensive sectors seen as relative winners

Among the names identified by the firm, Genuine Parts Company shows a 78% correlation to the 10-year Treasury yield, making it one of the stocks that could outperform if rates move higher. The consumer discretionary and automotive replacement-parts distributor is down nearly 40% from its recent high, but analysts remain broadly constructive, with six of 14 ratings at buy or strong buy.

Piper Sandler also includes Conagra Brands, which has a 75% correlation to the benchmark Treasury yield. The packaged food company's shares are about 40% below their 52-week highs as it manages margin pressure from higher commodity costs, but elevated yields could offer relative support to the consumer staples name.

Insurers including Arch Capital Group, Cigna Group and Everest Group also appear on the list. The group is often viewed as better positioned in a rising-yield environment because insurers can charge higher rates as yields increase.

In our earlier coverage of Manulife Financial’s latest performance and outlook, we highlighted a sharp jump in Q1 2026 net income to C$1.19 billion alongside dividends and sizable share buybacks that supported per-share returns. We also noted that, despite mixed near-term technical signals, the stock was consolidating above key medium- and long-term support levels, with a range-bound bias unless it cleared resistance around C$52.78.

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