As US 10-year Treasury yields rise again, Bank of America strategists predict that traders may reconsider strong economic data as a negative signal, as this suggests that the Federal Reserve will need to keep interest rates high for a longer period of time. The team led by Ohsung Kwon said in a report to clients on Tuesday that fears about growth are fading, and inflation and interest rates are gradually attracting more attention. Since the sell-off in August, US stocks have been rising along with bond yields, but as 10-year yields rise above 4.5%, Bank of America believes “the market is shifting to a 'good news is bad news' model.” 4%-4.25% has always been the range where there is a positive or negative transition in correlation. Since the US election, the S&P 500 index has been more sensitive to macroeconomic news. Of the 12 trading days since the December meeting of the Federal Reserve, the index fluctuated by 1% or more on 6 trading days. The strategist said the 74 basis point change implied by the release of the non-farm payroll report on Friday showed an “attractive level of buying.”

As US 10-year Treasury yields rise again, Bank of America strategists predict that traders may reconsider strong economic data as a negative signal, as this suggests that the Federal Reserve will need to keep interest rates high for a longer period of time. The team led by Ohsung Kwon said in a report to clients on Tuesday that fears about growth are fading, and inflation and interest rates are gradually attracting more attention. Since the sell-off in August, US stocks have been rising along with bond yields, but as 10-year yields rise above 4.5%, Bank of America believes “the market is shifting to a 'good news is bad news' model.” 4%-4.25% has always been the range where there is a positive or negative transition in correlation. Since the US election, the S&P 500 index has been more sensitive to macroeconomic news. Of the 12 trading days since the December meeting of the Federal Reserve, the index fluctuated by 1% or more on 6 trading days. The strategist said the 74 basis point change implied by the release of the non-farm payroll report on Friday showed an “attractive level of buying.”