Paul Tudor Jones, a hedge-fund luminary, said he’s expecting bond yields and stocks to rise in tandem toward the end of 2018.
“I think you’ll see rates go up and stocks go up in tandem at the end of the year,” Jones told CNBC Tuesday morning. He makes the case that real rates remain historically low and that rising yields, which move inversely to bond prices, won’t deter investors from buying stocks.
“I can see things getting crazy particularly at year-end after the midterm elections,” Jones said, referring to the potential for U.S. equities to rally after key notes in November.
Conventional wisdom holds that if rates climb too rapidly it could create a headwind for equities because rising rates mean increased borrowing costs for corporations and richer yields can also undercut demand for stocks, compared against the perception of bonds as risk-free assets.