Treasury yields to retreat “temporarily”

The S&P 500 fell 0.8 percent last week, its first decline after two consecutive weeks of gains.

Stocks fell after the US 10-year Treasury yield spiked to over 1.7 percent late in the week following indications from the Federal Reserve after its monetary policy meeting last week that no interest rate hike is likely through 2023.

Nevertheless, Bianco Research president Jim Bianco told CNBC on Friday that stocks are likely to get a boost this spring because the 10-year Treasury yield will temporarily retreat.

“The near-term forecast is it’s oversold, and it’s probably due for a rally – meaning that we would have falling rates,” Bianco said.

However, for the longer term, Bianco sees yields moving higher.

“The trend towards yields is going to push-pull all year long,” Bianco said. “We could hit 2.50 [percent] over the next 12 months.”

Indeed, hedge fund billionaire Ray Dalio said on Saturday at the China Development Forum that the Fed will have to buy more bonds to help limit the rise in interest rates.