Any Mild Decline in Treasury Yields Won't Help Stocks Much
- If the breakout in Treasury yields turns out to be a head fake, it won’t give much help at all to the stock market. Yields have risen in such a dramatic way over the past 5-6 months, that a pullback (to something like 4.1%) will still leave them near their highest levels in 16 years.
- Our call in July…warning that the yield curve was likely going to steepen…seems to be playing out. However, as we highlighted back then, this is actually a bearish development for the stock market, not a bullish one.
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