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Stocks remain attractive despite rising yields: Morgan Stanley

The market may have turned around due to inflation concerns.

But according to Morgan Stanley’s Matthew Hornbach, that should have happened earlier.

According to his research, a rise in Treasury yields does not have a long-term impact on the market, as it is not usually the type of rise associated with stock weakness.

“Interest rates will not skyrocket. We don’t see the tantrums of 2013 when interest rates rose 150 basis points in three months,” the company’s global head of macro strategy told CNBC.Trading country” on Tuesday.

But it took Testimony of Federal Reserve Board Chairman Jerome Powell Quiet Jitter on Tuesday before the Senate Banking Commission. Following his comment Dow Staging Large 360 ​​point comeback And it closed almost 16 points higher.

“Due to the nature of rising interest rates, the rise in interest rates seen in the last six months is not really a problem,” Hornbach said.

Hornbach lists Covid-19 case statistics, manufacturing data, and improved expectations of another historic virus-assisted package for increased yields.Benchmark at the end of Tuesday 10-year government bond yield It was 1.34%. Has increased by almost 24% in the last 4 weeks However, it decreased by about 9% compared to last year.

“The Fed also recognizes the need to maintain an extraordinary amount of accommodation on the market, which, of course, helps hold short-term interest rates at zero for the long term,” he added. .. “The combination of these two factors could continue to spike the yield curve and keep long-term interest rates rising towards 2%.”

Hornbach said there would be no problem until the 10-year yield reached 2.5%.

“Then I think there may be different types of reactions to risky assets, including the equity market,” Hornbach said.

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Stocks remain attractive despite rising yields: Morgan Stanley

Source link Stocks remain attractive despite rising yields: Morgan Stanley

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