If there’s one core view at the heart of the investment strategy at Australia’s biggest pension fund, it’s that yields still have a long way to rise.

The exodus from Treasuries will continue until 10-year yields top out at 3% or so, which would be high enough to imperil economic growth and force the Federal Reserve to respond, according to Carl Astorri, head of asset allocation at AustralianSuper Pty., which manages A$210 billion ($161 billion). He has been further trimming government bonds and shifting equities toward so-called value stocks.

“Bond yields rise until they break something, until they cause pain for borrowers,” he said. “At the moment, we’re assuming that we’re entering, at the very least, a standard expansion phase of the cycle and quite possibly a kind of overheat or a boom.”

Yields on 10-year Treasuries surged more than 100 basis points in six months to hit 1.75% in the current rout, a level last seen more than a year ago, on fears a stronger recovery could fuel inflation and a pullback in central bank support. With governments around the globe still adding to trillions of dollars of stimulus to ride out the pandemic, one of the biggest questions for markets is when do yields climb to levels too tempting for investors to resist switching back toward bonds.

Astorri, who worked at the Bank of England early in his career before joining the financial-services industry, reckons another 100 basis points or so may be needed before that tipping point is reached.

He shifted AustralianSuper’s bond portfolio to an underweight position in late 2020, almost a year after he had boosted his holdings in a successful bet that the Reserve Bank of Australia would cut rates and buy bonds. The fund sold more bonds earlier this year, and they won’t look attractive again until 10-year Treasuries are above 2.5%, he said.

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