topstockalerts
Barclays said Friday that stocks have held up relatively well during the global bond selloff, but rising yields are making equities a less obvious choice. Bond volatility has reached its highest level since U.S.-Iran tensions in March, while equity volatility remains relatively contained.
Strategist Emmanuel Cau noted that price-to-earnings ratios have fallen over the summer, but bonds have also become cheaper, leaving the equity risk premium near multi-decade lows. As a result, the “TINA” argument for holding stocks has become less compelling.
Barclays said higher rates do not necessarily hurt equities, as much of the increase reflects stronger growth and expectations that AI will boost the economy. However, Brent crude remains above $100 a barrel and major central banks are raising rates again. The bank expects markets to remain tense at least through the Q3 earnings season, with hopes for U.S.-Iran de-escalation continuing to support equities but remaining elusive.
$LCO $BCS
