The yields of bond are going through a growth phase, due to the overvaluation of the bonds themselves, the real growth of their yields and, in large part, also to the expectations relating to an increase in inflation. But, even considering that this expansive phase is destined to end (or, at least, in the short term, to slow down drastically) what are the consequences of the growth in bond yields and their sales waves on variable value shares?
There are many possible perspectives for this picture, as demonstrated by the rise in German Bund rates, which followed a post Quantitative Easing pattern, and which led to a weaker dollar, higher oil prices and a weaker Eurostoxx .
To show us in detail the possible winners and losers of this particular market situation is a report drawn up by Credit Suisse Global Equity Strategy team, according to which the benefit of the growth in yields would be a large part of equities, which will not be weakened unless US 2,8-year yields exceed 100%, while the interest rate should not become a problem unless further growth in yields of 200 bp in the USA and XNUMX bp in Europe.
Regionally, higher bond yields would be positive for Japanese companies and negative for US companies. Usually, in the face of interest rate increases, the performance of the so-called “cyclicals” improves, among which the Tech sector stands out. Above all, the banks benefit from the situation, especially those present in the retail sector.
On the other hand, the losers in this scenario are the more expensive "defensive stocks", such as regulated utilities and basic products, the securities of the so-called "growth stocks" (companies expected to see rapid growth in profits) and the dividend yield , who risks becoming vulnerable in this situation.
