Rising bond yields have triggered traders to automatically hit sell on the whole stock market lately on fears higher rates will drag on the whole economy. But they may be making a mistake. History shows certain stocks thrive when rates rise, while other stocks suffer badly.
The yield on the benchmark 10-year Treasury note has steadily crept higher over the past month to a four-year high and is hovering just below the key psychological level of 3 percent.
CNBC used hedge-fund tool Kensho to analyze which stocks have the highest correlation to the bond market and bond yields over the past six months.
Let’s start with stocks that may win if the 10-year yield tops 3 percent.
Think of these Dow Jones industrial average stocks below as the “anti-bonds.” These are the stocks that have a negative correlation with bond prices and therefore a positive correlation to rising bond yields. We used the iShares 20+ Year Treasury Bond exchange-traded fund (TLT) as our proxy for the bond market.
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