Bond yields could head lower into next week, as pensions and other big investors buy bonds to rebalance their portfolios for the end of the quarter.
Big investors would also have to shave down stock positions, to bring their asset allocations in line, after the nearly 5% first quarter gain in the S&P 500. Stocks normally might be under pressure from the selling, but strategists say their performance lately has been tied to bond yields, and falling yields could draw in buyers, especially to growth stocks.Pension funds and other major investors should be big buyers of bonds during the next week or so, as they rebalance their holdings to make up for the bond market's first quarter sell-off.
What happens to stocks is less clear. Normally, stocks would be under selling pressure as big investors rebalance by also reducing holdings because of the stock market's positive performance. Theis up 4.9% so far this quarter, and the same investors would be trimming holdings in equities, as they add to bonds.
But the stock market has been held hostage recently by rising interest rates, and whenever the yields have stabilized, stocks have done better. As yields slipped Monday, stocks rallied, especially the Nasdaq which has been hurt most by rising yields."That's the tug of war that's going on.
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This is a big fat lie CNBC
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