Hopes that a rout in Treasuries has run its course are tempting some investors back into the U.S. stock market after a months-long selloff. The relationship between stocks and bonds has been a tight one in recent months, with equities falling as Treasury yields climbed to...
Hopes that a rout in Treasuries has run its course are tempting some investors back into the U.S. stock market after a months-long selloff. The relationship between stocks and bonds has been a tight one in recent months, with equities falling as Treasury yields climbed to 16-year highs. Higher yields offer investment competition to stocks while also raising the cost of capital for companies and households.
"The stability in rates is helping other asset classes find a footing," said Jason Draho, head of asset allocation Americas at UBS Global Wealth Management. "If equities move higher you may find investors starting to feel as if they need to chase performance through the end of the year." Aggregate equity positioning tracked by Deutsche Bank fell to a five-month low earlier in the week, the firm's strategists said in a Friday note, helping fuel a powerful bounce when investors rushed back into the market.
Bullish sentiment received another boost on Friday from U.S. employment data, which showed a slight gain in the unemployment rate and smallest wage increase in 2-1/2 years, suggesting that the labor market is cooling, bolstering the case for the Fed to stay its hand. The S&P 500 closed up 0.9% on the day.
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