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Michael Kao: Long-end rates pressure equities as growth supports high-duration stocks

Michael Kao: Long-end rates pressure equities as growth supports high-duration stocks
Long-end rates challenge equities support

Michael Kao, CIO at Akadia Capital, uses a metaphor from Wile E. Coyote to describe current market conditions in equities.

He notes that a rise in long-end interest rates has effectively removed what he calls the 'Bond Floor' that previously provided support for equities, leaving only growth expectations to keep the highest-duration stocks elevated.

Kao recently noted that Treasury ETF TLT showed signs of a capitulation bottom, revealing he had bought short-term call options amid perceived overselling in a previous comment. Earlier, he analyzed surprising jobs data and rising yields, attributing the moves to bond normalization and AI-related debt trends in another update. These observations frame his ongoing assessment of shifting support levels for equities.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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