Bonds have bruised one major group of stocks, but one trader is ready to buy

has tumbled more than 7% in August, vulnerable to tumbling yields and a 10-year/2-year yield curve that finally inverted early Wednesday. A flatter, or inverted, yield curve takes a hit to bank profitability."By the time that the yield curve starts to steepen, I think it will be too late [to jump back into banks stocks].

"If your position is that these interest rates in this bond market are predicting a terrible future and a horrible recession to come, then you probably shouldn't be in stocks at all," he said.

The XLF ETF tried and failed to break out above a September peak above $29. It then rolled over to fall nearly 9% from July high to its August bottom. "When you look on a relative basis also toward the XLF, the group remains in a downtrend since the beginning of last year so until that changes, I think it's really difficult even with signs of balance sheets in really good shape," said Newton. "It really pays to wait until we see some evidence of yields stabilizing or turning up."

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Stocks and Bonds Are Talking Past Each OtherThe yawning gap between markets is perplexing some investors, who say they struggle to discern how stocks can churn higher when bond yields are signaling a downturn may not be far off. Who says that is a direct colleration anymore? The Federal reserve manipulated that relationship. Why is the wsj so academic these days? What is to discern? The bond market is the crystal ball 🔮 God forbid the stock market be a bubble or anything.
Fonte: WSJ - 🏆 98. / 63 Leggi di più »