Column-High and rising yields no barrier to higher stocks: McGeever

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299 Queen Street West and the golden era of MuchMusic | SaltWireORLANDO, Florida - Fears that high and rising Treasury yields will pummel Wall Street are understandable, but ultimately misplaced - history shows that the link between yields and stocks ranges from patchy at best, to non-existent.

That's in a world with bond yields up over 100 basis points in the last three months to their highest since 2006-07, and the entire yield curve briefly trading above 5.00% recently. The signal stocks receive from high bond yields may depend on why they are elevated. If yields are high due to inflation fears, stocks may struggle; if it is due to strong growth, stocks will generally do better.Research by Callie Cox, investment analyst at eToro, shows that since 1962, there have been 66 months where the 10-year Treasury yield has risen by half a percentage point or more.

The S&P 500's performance in the subsequent 12 months was higher 35 times, lower 14 times, and flat once. The average 12-month return was 8.1%, and the median 12-month return 12.1%.

 

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