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Investors can take a break from the wild fluctuations in the market.
Wall Street forecaster Jim Bianco expects stocks to get a boost this spring as the yield on benchmark 10-year Treasuries will temporarily decline.
“The short-term forecast is that it’s oversold, and it’s likely due to a rally – which means we would have rates down,” the president of Bianco Research told CNBC’s “Trading Nation” on Friday.
He predicts the drop will benefit indexes, including the high-tech Nasdaq, which has been rocked by the rate hike over the past month. The Nasdaq is particularly vulnerable to rates as technology is viewed as a long-lived asset like Treasurys.
“The stock market will definitely act as a relief,” Bianco said.
The 10-year yield closed the week at 1.70%, and is up nearly 89% so far this year.
“Maybe we can see it fall back to 1.50 [percent]”Bianco added.” But I would consider nothing more than a respite from a long-term move for higher returns.
Bianco, who sees inflation as his biggest worry for 2021, predicts it will heat up in the second half of the year due to a strong economic recovery coupled with a record amount of federal coronavirus aid.
“The checks for $ 1,400 are coming into bank accounts today. Literally today, right now,” he said. “By Monday, President [Joe] Biden said one hundred million checks would be mailed. “
By the end of this year, Bianco fears that it will be virtually impossible to avoid sustained inflation for the first time in a generation.
“The trend towards yields is going to push-pull throughout the year,” said Bianco. “We could reach 2.50 [percent] over the next 12 months. So about 75 basis points more. “
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