Strategist says a bond market ‘tipping point’ will signal it’s time to sell stocks

Traders work the floor of the New York Stock Exchange.


The stock market rally from March’s lows is reaching a near-term valuation test, according to BCA Research, and Treasury yields will give a signal when it’s time to sell.

Despite the uncertainty and risk associated with the Covid-19 pandemic, global stock markets have been on a tear since the coronavirus-induced crash in March. The S&P 500 is up more than 10% year-to-date despite the pandemic, and has climbed by around 59.5% from March’s lows.

Meanwhile, the pan-European Stoxx 600 is still down almost 7% since the start of the year but sits around 39% higher than its Covid trough. Stocks got an additional boost this week when Moderna became the second pharmaceuticals company to say its coronavirus vaccine was highly effective in preventing Covid-19.

In a research note Thursday, BCA’s Chief European Investment Strategist Dhaval Joshi highlighted that since early 2018, a rise in the benchmark U.S. 10-year Treasury yield had “sent shudders through the stock market on four occasions: February 2018, October 2018, April 2019, and January 2020.”

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