The Imbalance of Stocks and Bonds: Predicting the Next Move

Analysts are questioning the sustainability of the current dynamic between declining earnings yields and rising Treasury rates, wondering how long it can persist before returning to more typical levels. While some believe that stocks may fall and earnings yields may rise, others, including UBS, are bullish on bonds, citing restrictive monetary policy, falling inflation, and the continued safe-haven appeal of the U.S. Treasury market. U.S. stock futures were weaker as the yield on the 10-year Treasury rose. In other news, struggling China property giant Country Garden made overdue bond payments, ARM Holdings is seeking to price its IPO, and companies like C3.ai, GameStop, and DocuSign are reporting earnings this week.