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Great Reflation Trade Brings New Threats to the Stock Rally

  • Pressure on bonds has Jefferies and UBS mulling market impact
  • S&P 500 earnings yield remains well above benchmark Treasuries
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Jill Carey Hall from BofA Securities, sees euphoria in the markets.Source: Bloomberg)
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For the first time in a long time, there’s a conversation on Wall Street about when equities might start to feel the heat from reflation signals in the bond market.

Powered by a rally in oil and bets on further U.S. stimulus, market-derived inflation expectations are near the highest since 2013.