Bond yields are up and stocks are down. Here’s a game plan

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Declining bond yields could bring some relief to the stock market and a retreat could boost the appeal of economically defensive stocks

Rising bond yields clobbered stocks in September, but some market watchers expect that the turbulence could be a good setup for investors betting on companies that can weather an economic downturn.higher for longer, they have not yet accepted the likelihood of a recession.

It’s an unusual conclusion to a sustained period of aggressive rate hikes by the central bank over the past 18 months. A hard landing characterized by recession and rate cuts are more in line with history. But Mr. Schulze argued that even a deceleration of U.S. economic growth, without a recession, will likely weigh on bond yields.

Still, declining bond yields could bring relief to the stock market. In particular, Mr. Schulze believes that a retreat will boost the appeal of economically defensive stocks – including utilities and U.S. health care companies, which don’t need a vibrant economy to thrive.

 

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