Federal Reserve Chairman Powell said Monday that inflation has jeopardized the economic recovery and that the central bank will take tough action. It also said that higher-than-usual interest rate hikes may be taken if necessary.

Mr Powell's aggressive attitude widened the intraday rise in 10-year US Treasury yields to more than 10 basis points, above 2.30 per cent, the highest since May 2019; and two-year Treasuries, which better reflect monetary policy expectations, rose nearly 20 basis points a day, rising above 2.1 per cent for the first time in nearly three years.

It is worth noting that when the yield of short-term bonds is higher than that of long-term bonds, it is called "inverted curve", and the upside-down yield curve is a typical signal of the coming recession; the yield gap between 10-year bonds and 2-year bonds has been narrowing since the beginning of the year. at present, the difference is less than 20 basis points.

BofA strategists warned that the change in the Treasury yield curve was not only a reflection of the start of the Fed's tightening cycle, but also a "recession risk". The market appears to be challenging the idea of a soft landing for the US economy put forward by the Fed at its FOMC meeting in March. "

Although some analysts believe that the upside-down curve does not necessarily herald a recession, they agree that economic growth is bound to slow. Morgan Stanley said on Sunday, "the reversal of the yield curve does not mean a recession is coming, but we do think earnings growth will slow down significantly." "

Now that the geopolitical situation is tense, commodity prices are soaring, global inflation is high and the economy is facing recession, Wall Street investment banks are worried about "stagflation". At the same time, they also see the opportunity in danger; they have the following views on the investment layout under the threat of stagflation.

Goldman Sachs Group: from focusing on high-income shares to focusing on high-margin stocks

"We are moving from a decade of focus on revenue growth to a cycle in which investors will pay more and more attention to profit margins," said Goldman Sachs Group, an analyst. In the current environment, nominal GDP will be higher and revenue growth will be less scarce as inflation rises. On the contrary, the higher the inflation, the more valuable the profit margin and the less volatile it is. "

The high-profit stocks selected by Goldman Sachs Group are:$eBay (EBAY.US) $、$Coca-Cola Company (KO.US) $、$Pfizer Inc (PFE.US) $、$Visa Inc (V.US) $、$Procter & Gamble Co (PG.US) $、$The Home Depot Inc (HD.US) $、$Apple Inc (AAPL.US) $、$Oracle Corp (ORCL.US) $、$Verizon Communications Inc (VZ.US) $、$McDonald's Corp (MCD.US) $。

Jeffery: recommend high dividend stocks and be optimistic about health care and consumer goods

Jeffery analysts point out that the company's "cash flow and balance sheet are becoming the focus" and that high-dividend stocks, known as "cash machines", usually outperform the market during periods of high inflation and slowing economic growth. The bank is optimistic about it.$Pfizer Inc (PFE.US) $、$Medtronic PLC (MDT.US) $And other health care units, and including$Procter & Gamble Co (PG.US) $、Best Buy (BBY.US) $、Hasbro (HAS.US) $和$The Home Depot Inc (HD.US) $Including several consumer goods companies.

Xiaomo: focus on energy stocks, consumer and retail stocks

JPMorgan Chase & Co especially likes energy-related stocks, such as$Exxon Mobil Corp (XOM.US) $和$Sunrun (RUN.US) $And predict$UBER TECHNOLOGIES INC (UBER.US) $、$McDonald's Corp (MCD.US) $、$Nike Inc (NKE.US) $、$Target Corp (TGT.US) $和$The Estee Lauder Companies Inc (EL.US) $Some consumer and retail stocks will rebound. Dubravko Lakos-Bujas, a U.S. equity strategist at the bank, has a 2022 price target of 5050 for the S & P 500.

Yardeni Research: focus on energy stocks, financial stocks and information technology stocks

Yardeni Research, an investment consultancy, points out that there will be more panic selling in the US stock market this year, mainly due to persistently high inflation and the Fed's possible poor response. Yardeni Research expects investors to offset the decline in price-to-earnings ratios by increasing their holdings in energy stocks that hedge against inflation, financials that benefit from rising interest rates and information technology stocks that bet on the theme of the "roaring 2020s".