A peak in bond yields may be near but that's not necessarily good news for equity investors, according to JPMorgan. Mislav Matejka, head of global and European equity strategy at JPMorgan, expects bond yields will soon fall after their recent rise. Last week, the U.S. 10-year Treasury yield hit its highest level in 16 years as traders adjusted to an increased supply in bonds, as well as a higher-for-longer interest rate narrative from the Federal Reserve.
" However, the story is different for equity investors, the strategist said. Traders should remain wary as company earnings and a weakening macroeconomic picture could continue to pressure stocks, he said. "If bond yields roll over, will it help equity valuations?" Matejka asked. "Not if yields are peaking at the time when earnings, and the broader economy, start to disappoint.
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