Bank of America's latest survey of global fund managers shows they have 56% of their portfolios in equities, the highest proportion since November 2021, even as a disorderly rise in bond yields is seen as the second-largest threat to the equity market after concerns about an AI bubble. The jump in yields is the elephant in the room that threatens to derail an equity market that has had trouble staying near records, according to Tyler Richey, editor of the Sevens Report Technicals newsletter. Strategists largely conclude yields haven't climbed high enough to derail the bull case for stocks, with JC O'Hara of Roth Capital Partners saying investors should be bullish or at least opportunistic given stronger earnings expectations and better economic outlooks. The US Treasury unexpectedly said it would ramp up buybacks of long-dated government debt, sending the 10-year yield down six basis points to 4.65% and the 30-year yield down nine basis points to 5.19%. Ed Clissold of Ned Davis Research said the equity market is in a sweet spot of the yield curve, with the 10-year about 49 basis points higher than the two-year, a range that has historically produced average annual S&P 500 returns of roughly 11% since 1976.
Bank of America CorpTreasury buybacks and yield decline to 4.65% lower the 10-year yield.
Treasury buybacks and yield decline to 5.19% lower the 30-year yield.
