Investors may have a break from the sudden changes in the market.
Wall Street forecaster Jim Bianco expects stocks to gain momentum this spring because Treasury note yields at 10 benchmarks will temporarily decline.
“The short-term forecast is overselling and a concentration is likely to occur, which means we would have low rates,” the White Research president told CNBC’s “Trading Nation” on Friday.
He predicts the fall will benefit the indices, including the Nasdaq, which has been highly technological and has been shaken by rising rates in the past month. The Nasdaq is particularly vulnerable to rates because the technology is considered a long-term asset like Treasurys.
“The stock market will definitely act like a relief,” Bianco said.
The ten-year yield closed the week at 1.70% and rose nearly 89% so far this year.
“Maybe we can see him fall to 1.50 [percent]”Bianco added.” But I would consider nothing more than a respite in a long-term move to get higher returns. “
Bianco, who lists inflation as his big concern for 2021, predicts it will heat up in the second half of the year due to a strong economic recovery along with a record amount of federal aid for the coronavirus.
“There are $ 1,400 checks in bank accounts today. Literally today, right now,” he said. “Monday, President [Joe] Biden said there will be one hundred million checks in the mail. “
At the end of this year, Bianco worries that it will be virtually impossible to avoid lasting inflation for the first time in a generation.
“The trend toward yields will increase year-round,” Bianco said. “We could reach 2.50 [percent] over the next 12 months. So about 75 basis points more. “
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