“A higher cost of capital is detrimental to equity valuations,” said Que Nguyen, chief investment officer of equity strategies at Research Affiliates. No wonder: Benchmark 10-year real rates climbed as high as 2.12% intraday on Thursday, the highest level since 2009. Sustainably high real rates serve to tightening financial conditions — an oft-stated goal of the Fed chair. But Powell’s emphasis that higher real yields are needed in the last leg of his fight against inflation introduces uncertainty to that sanguine projection. “The FOMC clearly sees higher real rates as needed to restore price stability,” UBS economists including Jonathan Pingle wrote in a report.