This Bond Selloff Isn't Over Just Yet: 3-Minutes MLIV
Speakers
Mark Cudmore
— Executive Editor, Bloomberg Live / Macro Strategist
Summary
Mark Cudmore discusses the ongoing bond selloff, predicting further yield increases in the short term. He warns stocks may retrench after recent gains, and advises against rushing to buy the dip in semiconductor stocks due to likely extended pain. The broader theme is that higher yields will persist, but with fits and starts.
- US Treasury yields expected to rise further in the short term.
- Bond selloff is only paused, not finished.
- Stocks could see a retrenchment over the next few weeks.
- Semiconductor dip buying is risky and may take time to play out.
- Higher yields are being driven by both strong economy and fiscal/inflation concerns.
- The market shows herding behavior in AI-related trades.
Trade Ideas
US Treasuries yields to rise further
Yields are going much higher over the long term, and the current bond selloff has more to go in the short term. The pause is temporary; the selloff will resume. Higher yields are driven by resilient economy but also by supply-side inflation and fiscal concerns.
Stocks may retrench in coming weeks
Stocks can retrench a bit in the coming weeks given the extraordinary gains and herding behavior. The dip will eventually be bought, but not quickly. Higher yields are ultimately bad for stocks, but the impact may be less dramatic.
Semiconductor dip buying likely painful
Buying the dip in semiconductor stocks will be painful because the first dip buyers will be cleaned out and the selloff may last a few weeks. The sector has seen extraordinary gains and massive herding, so the pullback could be more extended.
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Speakers: Mark Cudmore · Tickers: TLT, SPY, SMH