Raymond James warns by that any recovery in Equities is short-lived

© Stocksak. Raymond James Warns: Any recovery in Equities will be short-lived

By Senad Karaahmetovic

Raymond James strategists reflected on the U.S. stocks after the S&P 500 closed the last week almost 5% higher.

Stocks rallied following the WSJ article suggesting that the Fed may slowen rate hikes. The Fed will deliver another 75-bps rate rise next month. The strategists believe stocks will trade under pressure as long yields rise.

Thursday’s surge in the yield on government bonds to 4.33% was a 15-year record.

“A terminal 10-year Treasury yield of 4-4.5% would be logical, which is effectively where the bond market already is after last week. So unless the Fed increases the peak Fed funds rate above 5%, we may be very near a peak in 10-year Treasury yields,” the strategists told clients in a note.

However, they warned the firm’s clients that EPS expectations are yet to bottom. They see EPS forecasts coming down “materially” through 2023, and potentially 2024 if the Fed continued to act in a hawkish manner.

“Just a reminder, these last 2 hikes will likely be 1.50-1.75%, and we may not feel the full EPS impact from them until 2H23 or 2024,” the strategists concluded.

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