以股票和量化策略师Ohsung Kwon为首的美银国际策略师团队在周一的一份报告中指出，历史数据显示，当10年期美债收益率从12个月峰值下降超过1个百分点，同时ISM制造业PMI指数从12个月低点提高超过4个百分点时，标普500等权重指数在90%的情况下表现优于市值加权的标普500指数。Source: China Securities News.
Over the past week, the crazy surge in the US small-cap stock market has investors wondering whether this year's big tech stock winners will continue to perform strongly.
Bank of America's global research strategists say that continued stock market rotation depends on whether the 10-year US Treasury bond yield is below 4% and whether the ISM Manufacturing PMI Index is above 50%.
Bank of America's international strategy team led by stocks and algo strategist Ohsung Kwon pointed out in a report on Monday that historical data shows when the 10-year US bond yield falls more than 1 percentage point from its 12-month peak and the ISM Manufacturing PMI index rises more than 4 percentage points from its 12-month low, the CSI 500 Equal Weight Index outperforms market-weighted S&P 500 index in 90% of cases.
This suggests that for the stock market rotation to continue, investors need to see the current 10-year US bond yield at around 3.99%, below its 52-week closing high of 4.99% set on October 19, and an ISM Manufacturing PMI index above 50%, indicating expansion in the sector.
Kwon and his team wrote: "The manufacturing economy is in the second longest recession in history, with no two-month PMI above 50% in the past 21 months. We believe this is largely due to the inventory cycle and expect it to ease in the second half of 2024."
The Institute for Supply Management (ISM) Manufacturing Index fell to 48.5% in June from 48.7% last month. The key index for American factories fell to its lowest level in the past 12 months, dropping to 46.5% in July 2023. Numbers below 50% indicate contraction in the industry.
10-year US Treasury yields rose 3 basis points to 4.268% on Monday as traders focused on the possibility of Vice President He Jingli being elected as the Democratic presidential nominee. According to FactSet data, 10-year US Treasury yields have risen 37.8 basis points this year due to persistent inflation concerns keeping the Fed on hold for rate cuts.
However, traders in the Federal Funds futures market believed on Monday, according to CME FedWatch tool, that the probability of the Fed starting to cut interest rates in September was 93.6%, but decision-makers will still face a wave of inflation data before deciding on a late summer rate cut.
On Monday, the US stock market rose, with the seven giants and chip stocks leading the rally after suffering heavy losses last week.
Editor / jayden
