Battered Bond Market May Give Pause to Stampeding Stock Bulls
- Rising Treasury yields chip away at Fed model valuation tool
- Spike in rates, inflation biggest threat to stocks: BofA
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Whether or not Bill Gross and Jeffrey Gundlach are right about the end of the golden era for bonds, the selloff may give pause to equity bulls after a euphoric and overbought rally.
Surging Treasury yields caused a key stock-valuation measure to touch the most overheated since 2010 this week, while the new-year equity rally came to a screeching halt. Shifting expectations about the pace of U.S. interest-rate tightening could be the trigger for a potentially overdue stock correction, according to Goldman Sachs Group strategist Peter Oppenheimer. Bank of America Corp.’s James Barty reckons a taper tantrum and benchmark 10-year yields rising another 50 basis points represent the biggest threat to the equity rally this year.