Via a Barlcays note issed on Friday, analysts at the firm are warning o the potential for US stocks to turn lower, regardless of the direction of rates.
They say that the yield on the 10-year Treasury is getting close to a point where, from a historical perspective, it begins to show a stronger trend with S&P 500 earnings yields::
- “we
believe equities are facing a rock and a hard place depending on
whether inflation or growth forces the central bank’s hand first:
- entrenched inflation will motivate higher rates (like the pre-1991 era), which is negative for equity valuations,
- whereas lower rates also hold downside for equities if the underlying catalyst is a growth shock, i.e. recession”
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