Investors may get a break from the wild changes in the market.
Wall Street forecaster Jim Bianco expects stocks to gain momentum this spring as the 10-year Treasury Note yield returns temporarily.
“The short-term forecast is that it will be sold in excess and will likely rise to a rally – which means we would have declining rates,” Bianco Research President CNBC’s “Trading Nation” said on Friday.
He predicts that the decline will benefit indices, including the technology-intensive Nasdaq, which has been shaken by rising rates over the past month. The Nasdaq is particularly vulnerable to installments because the technology is considered a long-term asset, such as Treasurys.
“The stock market will certainly act as a relief,” Bianco said.
The 10-year yield closed the week at 1.70% and has risen by almost 89% so far this year.
“Perhaps we can see it falling far back to 1.50 [percent]”Bianco added.” But I would consider nothing more than a respite in a long-term move for higher yields. “
Bianco, who considers inflation to be his biggest concern for 2021, predicts it will warm in the second half of the year, thanks to a strong economic recovery, coupled with a record amount of federal aid for coronavirus.
“USD 1,400 checks reach bank accounts today. Literally today, right now,” he said. “Until Monday, President [Joe] Biden said a hundred million checks would be mailed. “
By the end of this year, Bianco is worried that it will be virtually impossible to avoid sustainable inflation for the first time in a generation.
“The trend toward yields will increase throughout the year,” Bianco said. “We could reach 2.50 [percent] in the next 12 months. So by about 75 basis points higher. “
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