A bond market ‘tipping point’ will signal it’s time to sell stocks


Traders work the floor of the New York Stock Exchange.

NYSE

The stock market rally from March’s lows is reaching a near-term valuation test, according to BCA Research, and Treasury yields will give a signal when it’s time to sell.

Despite the uncertainty and risk associated with the Covid-19 pandemic, global stock markets have been on a tear since the coronavirus-induced crash in March. The S&P 500 is up more than 10% year-to-date despite the pandemic, and has climbed by around 59.5% from March’s lows.

Meanwhile, the pan-European Stoxx 600 is still down almost 7% since the start of the year but sits around 39% higher than its Covid trough. Stocks got an additional boost this week when Moderna became the second pharmaceuticals company to say its coronavirus vaccine was highly effective in preventing Covid-19.

In a research note Thursday, BCA’s Chief European Investment Strategist Dhaval Joshi highlighted that since early 2018, a rise in the benchmark U.S. 10-year Treasury yield had “sent shudders through the stock market on four occasions: February 2018, October 2018, April 2019, and January 2020.”



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *