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Investors will get relief from falling Treasury yields: Jim Bianco

Investors may get a break from the market’s wild swings.

Wall Street forecaster Jim Bianco expects stocks to get a boost this spring because the benchmark 10-year Treasury Note 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,” the Bianco Research president told CNBC’s “Trading Nation” on Friday.

He predicts the drop will benefit the indexes, including the tech-heavy Nasdaq which has gotten rocked by rising rates in the past month. The Nasdaq is particularly vulnerable to rates because technology is considered a long duration asset like Treasurys.

“The stock market will definitely act like it’s a relief,” Bianco said.

The 10-year yield closed the week at 1.70%, and it’s up almost 89% so far this year.

“Maybe we can see it fall way back to 1.50 [percent],” Bianco added. “But I wouldn’t consider that anything more than a respite in a move for longer-term for higher-yields.”

Bianco, who lists inflation as his big worry for 2021, predicts it will heat up in the year’s second half due to a strong economic recovery coupled with a record amount of federal coronavirus aid.

“$1400 checks, are hitting bank accounts today. Literally today, right now,” he said. “By Monday, President [Joe] Biden said one hundred million checks will be in the mail.”

By later this year, Bianco worries it will be virtually impossible to avoid lasting inflation for the first time in a generation.

“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. So, about 75 basis points higher.”

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