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- Equity rally should withstand higher yields – UBS
Equity rally should withstand higher yields – UBS
FXStreet reports that economists at UBS expect the rise in yields to go further, and they do not see this becoming disruptive or halting the equity rally.
“Even if the 10-year yield rises to 1.8% by the end of 2021, and to 2% in subsequent months, the equity risk premium – which indicates the relative appeal of stocks versus bonds – will still leave equities looking attractive, all else equal.
“Rather than ending the equity rally, we expect the rise in yields to favor cyclical sectors such as financials and energy over growth sectors such as technology, which experience a bigger drag on the present value of future cash flows from higher rates.”
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