Investors can take time off from violent market swings.
Wall Street analyst Jim Bianco expects stocks to get a boost this spring, as the yield on 10-year reference Treasury bills will temporarily decline.
“The short-term forecast is that it is oversold and probably due to a rise – which means that we would have falling rates,” Bianco Research’s president told CNBC’s “Trading Nation” on Friday.
He predicts that the drop will benefit the indices, including the high-tech Nasdaq, which was shaken by the rate hikes last month. Nasdaq is particularly vulnerable to fees because the technology is considered a long-term asset, like the Treasury.
“The stock market will definitely act as a relief,” said Bianco.
The 10-year yield closed the week at 1.70% and rose almost 89% this year.
“Maybe we can see it fall back to 1.50 [percent]”, Added Bianco.” But I would consider this nothing more than a pause in a long-term move towards higher yields. “
Bianco, who lists inflation as a major concern for 2021, predicts that it will heat up in the second half of the year due to a strong economic recovery associated with a record amount of federal aid for coronavirus.
“Checks for $ 1,400 are reaching bank accounts today. Literally today, now,” he said. “On Monday, president [Joe] Biden said that a hundred million checks will be in the mail. “
At the end of this year, Bianco fears that it will be virtually impossible to avoid lasting inflation for the first time in a generation.
“The yield trend is going to pull upward all year round,” said Bianco. “We could reach 2.50 [percent] in the next 12 months. Therefore, about 75 basis points more. “
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