The Fed's Next Chapter May Decide The Fate Of The Bull Market

Summary The US stock market is still posting strong gains for the year, but rising Treasury yields, if they continue to move higher, pose a threat to the bull run. On a year-to-date basis, the recent winners continue to dominate, but there are signs of rotation unfolding over the summer, based on ETF proxies for the major risk factors. The weakest performer this year is a basket of low-volatility stocks, up just 6.4%. More recently, however, the tables have turned and low-volatility is outperforming high beta by a wide margin over the trailing three-month window: a gain of 3.3% versus a decline of 7.8%. The recent rise in the 10-year Treasury yield is already flashing a warning for stocks. When the current yield is running at 100% of its highest level over the past 200 days, as is the case now, that can be a headwind for stocks in the near term. primeimages/iStock via Getty Images The US stock market is still posting strong gains for the year, but rising Treasury yields, if they continue to move higher, pose a threat to the bull run. A review of the major equity risk factors already shows This article was written by James Picerno 7.02K Followers Follow James Picerno is the director of analytics at The Milwaukee Co., a wealth manager that is the adviser to The Brinsmere Funds, a pair of global asset allocation ETFs. He also edits CapitalSpectator.com and The US Business Cycle Research Report (CapitalSpectator.com/premium-research). He is the author of three books, including "Quantitative Investment Portfolio Analytics In R: An Introduction To R For Modeling Portfolio Risk and Return." Previously he was a financial journalist at Bloomberg and before that at Dow Jones.