David Tepper, the founder of Appaloosa Management whose comments have been known to move markets, said it is very difficult to be downgraded right now and believes it is possible to end the Treasury sale that has raised rates.
The major market risk has been eliminated, Tepper said, adding that rates should be more stable in the short term.
“I basically think the rates have temporarily taken full advantage of the move and should be more stable in the next few months, which makes it safer to be in stock now,” Tepper told CNBC’s Joe Kernen, who shared the comments. about “Squawk Box.”
Bond yields have risen sharply in recent weeks amid higher inflation expectations, which have put pressure on risky assets. The 10-year Treasury yield rose from 1.09% at the end of January to over 1.60% on Monday. The rapid advance in yields has particularly hit technological stocks, as these companies have relied on light lending for higher growth.
Tepper believes that Japan, which had been a net seller of treasury, could start buying US government bonds again after rising yields. The potential buying force could help stabilize the bond market, Tepper said.
“This poses a major risk to the table and it’s very difficult to be grumpy,” Tepper told Kernen.
Another catalyst for short-term stocks is the fiscal stimulus package that has just been approved by the Senate, Tepper said.
The Democrat-controlled house is expected to pass on the $ 1.9 trillion economic aid and stimulus project this week. President Joe Biden is expected to sign the law before unemployment benefits expire on March 14.
The hedge fund administrator also said that “clear” shares such as Amazon are starting to look attractive after the withdrawal. Shares of the e-commerce giant fell 9.7% in the last month.
A year ago, before stocks began to fall due to the pandemic, Tepper warned that the virus could change the game in the markets.