Investors can get a breather from the wild swing of the market.
Wall Street forecaster Jim Bianco expects the shares to get a boost in the spring as the 10-year yield of the Treasury bond pulls back temporarily.
“The short-term forecast is that it’s oversold, and that it’s likely due to a rally – which means we’ll have declining rates,” the president of Bianco Research told CNBC’s ‘Trading Nation’ on Friday.
He predicts that the decline will benefit the indices, including the technological Nasdaq, which has risen by rising rates over the past month. The Nasdaq is particularly vulnerable to tariffs because technology as Treasurys is considered a long-term asset.
“The stock market will definitely act as if it is a relief,” Bianco said.
The 10-year return ended the week at 1.70% and it has risen almost 89% so far this year.
“Maybe we can see it fall back to 1.50 [percent]”Bianco added.” But I would no longer consider it a respite as a pursuit of higher returns in the long run. “
Bianco, citing inflation as its biggest concern for 2021, predicts it will heat up in the second half of the year due to a strong economic recovery, coupled with a record amount of federal coronavirus assistance.
‘There are $ 1400 checks hitting bank accounts today. Literally today, now, ‘he said. ‘By Monday, President [Joe] Biden said there would be one hundred million checks in the mail. ‘
By later this year, Bianco is worried that for the first time in a generation, it will be virtually impossible to avoid lasting inflation.
“The trend toward returns is going to push all year,” Bianco said. ‘We can hit 2.50 [percent] over the next 12 months. So, about 75 basis points higher. ‘
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