Rising real yields spell trouble, says BlackRock
by Ellie Ismailidou
Stocks have been in a sweet spot over the past few months, rising from their mid-February lows to just a few points below their all-time closing highs of May 2015.
But the rally’s days are numbered, said Richard Turnill, BlackRock’s global chief investment strategist, in his latest investing commentary released this week.
Turnill drew his conclusions about stocks by focusing on real Treasury yields, or yields minus inflation expectations.
According to Turnill, tumbling real yields supported the stock market’s sharp advance. As real yields have recently rebounded, stocks—which are inversely correlated to real yields,as the following chart shows—are bound to take a hit, Turnill argued.