Here’s where to invest now: As bond yields soar, Morgan Stanley’s top strategist Mike Wilson says focus on these key sectors
bond yields climbing to new heights, it's time for investors to change their strategies, according to Morgan Stanley’s CIO and chief US equity strategist Mike Wilson.
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The 4.5% threshold
According to Business Insider, the recent surge in yields, specifically the 10-year US Treasury yield surpassing 4.5%, is a threshold for investors that indicates that interest rate expectations are elevated. Wilson claimed that this level suggests that interest rates are now higher than levels that supported the stock market's recent outsize returns.
Back in December, Morgan Stanley viewed the 4%-4.5% range as the sweet spot for stock valuations, assuming that growth and earnings would remain steady, according to Wilson. At the time, 4.5% was seen as a key threshold for equity valuations.
However, Wilson now pointed out that earnings have become the primary driver of returns, and he expects that trend to continue in the foreseeable future, as per Business Insider.
Which sectors should investors focus on?
Wilson has advised investors to narrow their focus to select areas of the market.
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