Bonds aren't 'out of the woods yet' -- and that could mean trouble for stocks

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Sofi's head of investment strategy thinks a hot inflation report could spook bond investors and halt the fixed income rally.

"I don't think bonds are completely out of the woods yet," Young said. "We also haven't seen very much weak economic data...At this point there hasn't been a good reason for yields to come down and stay down."

Higher inflation could prompt the Fed to hike interest rates once more. Recent research from BlackRock shows the 10-year Treasury yield has closely tracked the Fed funds rate during this and other hiking cycles.recently. So a hot inflation report that sends yields higher would potentially not bode well for equities, which haven't reacted well to instability in the bond market.

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