Market Extra: ‘Underlying bullish tenor’: U.S. stocks fare surprisingly well as Treasury yields rise after hotter-than-expected inflation, says Morgan Stanley’s Andrew Slimmon

by | Feb 14, 2023 | Stock Market

U.S. stocks were choppy Tuesday in the wake of the consumer-price-index showing inflation rose more than anticipated in January, but the market avoided a big selloff. After “the CPI number came in a little hotter than expected,” the yield on the two-year Treasury note has climbed to around 4.6%, said Andrew Slimmon, an equity portfolio manager at Morgan Stanley Investment Management, in a phone interview Tuesday. “I’m surprised that it hasn’t had a more negative impact on stocks,” particularly growth equities, he said of the rise in two-year Treasury yields.

While Slimmon thought higher yields would have weighed more on the U.S. stock market in Tuesday’s trading session, he said that overall “I’m not particularly bearish.” That’s partly because he’s not expecting an “economic collapse,” he said, pointing to lagging defensive stocks as a sign of the “underlying bullish tenor” in the market. The U.S. Bureau of Labor Statistics said Tuesday that the consumer-price index rose 0.5% in January for a year-over-year rate of 6.4%. That’s above the 0.4% rise that economists polled by The Wall Street Journal had forecast for January. Still, the pace of inflation slowed over the past 12 months from a year-over-year rate of 6.5% in December.  Meanwhile, core data from the consumer-price index, which exc …

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