A rise in bond yields will pose a serious threat to the U.S. equity market at a time when earnings momentum remains weak, Societe Generale warns.
The French lender predicts that the S&P 500 will be flat “at best” for the coming quarters with a continued risk of a short-term correction.
“Rising bond yields during period of economic recovery are not necessarily bad for equities. However, at a time when earnings momentum remains weak and the consensus earnings growth estimate is expected to moderate, rising bond yields could be a catalyst for a U.S. equity market correction,” a strategy team led by Alain Bokobza at Societe Generale, said in a research note on Friday.
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