First-quarter corporate earnings have been robust so far, helping to push stock prices in the U.S. to new highs. The S&P 500 Index is now up over 11% for the year as the combination of earnings, economic data and stimulus continues to propel stocks higher. Stock prices have also benefited from a fall in Treasury yields recently that has helped equity sentiment. The 10-year Treasury yield has fallen from a high of 1.75% a few weeks ago to below 1.60%.
Given the amount of fiscal stimulus, the Fed’s zero-rate policy and strong corporate results, I would expect asset prices across most sectors to continue to push higher for the next few months. The biggest risk to a rally in risk assets is a jump in Treasury yields, which seems less likely to occur in the short term.
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