Tonix Pharmaceuticals stock halted ahead of FDA approval news
Investing.com -- Macquarie analysts have observed a shift in Australia’s economic indicators, with positive surprises beginning to emerge over the past week. This change in trend is accompanied by rising bond yields, which Macquarie interprets as a sign of upward pressure on yields in the near term.
The research firm anticipates that this upcycle of positive surprises will likely continue, reaching a peak around July, potentially amplified by increased activity due to tariff pauses, with the first pause ending on July 9.
The analysts note that rising bond yields typically indicate market expectations of fewer or delayed rate cuts by central banks. As central banks tend to react to economic surprises with a lag, Macquarie suggests that there may be a hawkish shift in central bank policy around July or August, which could serve as a catalyst for yields to reach their peak.
However, they also predict that the trend of positive surprises may reverse to negative surprises starting in mid-August.
In terms of market implications, equities generally perform better during periods of economic surprise upcycles. Despite the ongoing uncertainty surrounding tariffs, Macquarie believes that the improvement in sentiment could persist in the near term.
Nonetheless, they caution that the rise in bond yields poses a key constraint, especially if U.S. 10-year yields climb over 4.5%, a level at which equity markets often face difficulties.
Even with a flat overall market, the analysts expect that the combination of rising bond yields and diminished fears of a U.S. recession will likely lead to a shift in investment strategy. They foresee a rotation from bond proxies, which are typically favored in low-yield environments, towards stocks that stand to benefit from higher yields.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.