Global fund managers are being haunted by a new worry — the possibility that bond yields could shoot higher in a “disorderly” manner, stoking volatility that potentially spills over into stocks and the economy.

That’s according to Bank of America’s September survey of 170 managers who collectively have $470 billion in assets under management. Up from a net 27% in August, 33% of those managers now see uncontrolled rises in yields as the biggest “tail risk” facing them at present. A tail risk refers to a rare or extreme market event that has a low probability of happening.

The survey shows that fears about surging borrowing costs have even supplanted worries about the AI trade turning into a bubble.

The yield on the 10-year Treasury note on Tuesday rose above 5.04% for the first time since the global financial crisis in 2007. Benchmark yields from Germany to Japan have been tracking the 10-year higher.

Yields have been driven upward by worries over U.S. inflation, with oil prices climbing amid the Iran war. That has combined with investor concern about rising government debt and deficits and extra bond supply resulting from corporate AI spending. The Federal Reserve is not seen escaping the pressure, and it’s largely expected to hike interest rates on Wednesday when its two-day monetary-policy meeting concludes.

The survey also showed that a net 46% of managers surveyed expect no impact on yields from the U.S. Treasury’s buyback program, which was announced earlier this month to help keep the world’s biggest debt market running smoothly and stabilize long-end rates. Those managers who see a success were at a mere net 16%, with those expecting total failure at 29%.

A long position in global semiconductor stocks was again flagged as the most crowded trade by a whopping net 53% of managers, with a short position in Treasurys coming in at second, at 18% of managers. The Philadelphia Semiconductor Index has surged 57% this year.

The managers trimmed their overweight positions in stocks and commodities but are keeping a large underweight in bonds, Bank of America reported. September saw a rotation into healthcare, industrials and banks — the most overweight since November 2025 — and out of real-estate investment trusts and consumer staples, which are now the most underweight since January 2004.