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Rising Yields Won’t Hurt Everyone

There has been much made in the press lately about how rising long-term yields will hurt stock and bond prices. Historically speaking, that is not a reliable assumption. Rising yields are usually correlated with rising stock prices, and as long as yields don’t rise uncontrollably, we would expect that correlation to remain intact in 2013. Some industry groups are particularly well positioned to benefit from even a small increase in yields. For example, so far this earnings season the big banks like JPM, WFC, and C have exceeded profit expectations partially due to a more favorable yield spread environment. (more…)

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