Stock market rally won't last as investors become risk-averse: DataTrek

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The stock market rally will run out of steam because investors are shifting to risk-off even as inflation expectations ease

Upward moves in longer-dated US Treasurys suggest the stock rally of the last seven weeks may not be sustainable, according to DataTrek Research.

That reflects a difference of 0.18 percentage points, which almost mirrors the 0.19 percent point increase in inflation expectations baked into 5-year Treasurys, Colas said. "This tell us that real interest rates have been rising over the last month, indicating that investors are demanding a higher inflation-adjusted risk-free rate of return," Colas wrote."Put another way, the recent spike in yields is not just about inflation. Rather, it is a sign that investors are growing more risk averse."

 

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