Fears about rising bond yields are way overblown. This has turned investor sentiment quite dark — and created a textbook contrarian buy signal. Here are six reasons why you can feel confident betting against the gloom and doom crowd and put money into the market — especially in economically sensitive cyclical stocks.
1. Bond yields are up because of tax-loss selling, which will end soon: Portfolio managers avoided stocks and loaded up on bonds in 2022. We know this because the sell-side suggested bond exposure was near all-time highs last year and this year as well. Now, portfolio managers are sitting on huge losses in bonds. The iShares 20+ Year Treasury Bond exchange-traded fund
for example, is down almost 50% from highs in 2020, and more than 40% from the start of 2022, when investors favored bonds over stocks because of U.S. recession fears.
“ Money managers have until the end of October to finish tax-loss selling. ”