Bonds Are Telling U.S. Stock Bulls to Temper Their Enthusiasm
- Analysis shows S&P unlikely to gain more than 5% by end 2018
- Idea bucks bullishness by Deutsche chief global strategist
Lacaille Says Don't Bet Against Bonds
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A seemingly bullish backdrop for U.S. stocks starts to disappear as Deutsche Bank AG delves deep into the the Treasury market.
Ultra-low yields have been cited as a key driver of the rally in equities under the theory that they push investors toward riskier assets with higher potential returns. But when Dominic Konstam, the global head of rates research at the bank, examined the bond market, he found underlying dynamics suggesting the upside to equities is less than 5 percent through year-end 2018. That’s a far cry from the 14 percent surge in the S&P 500 Index envisaged by chief global strategist Binky Chadha if U.S. tax legislation is enacted.