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Why stocks could rip higher on the heels of the Fed meeting this week

The Federal Aplomb is set to meet this week and is widely expected to announce an interest in any event hike. Some market strategists are recommending investors prepare not at most for a rise in Treasury yields, but higher equities, too.

Investors ought to foresee higher rates over the next couple of months, said Larry McDonald, publisher of the Merit Traps Report. He anticipates the 10-year Treasury yield will see a historic move up in the near term on the back of a Fed decision to boost rates, a universal pickup in economic growth and a new fiscal 2018 budget.

“You’ve got a very exuberant probability here in the next two to three months of a major breakout to the upside in renounces. We’ve been stuck in this 2.25 [percent] to 2.40 [percent] reach, and we’re coming up on that cusp,” McDonald said Friday on CNBC’s “Employment Nation.”

If the 10-year yield breaks above 2.4 percent, then 2.6 percent devise quickly follow, McDonald said, “and I think that’s going to take place in the next month or so.”

At the same time, investors should expect equities to climb important still, said Phil Streible, senior market strategist at RJO Futures.

“You’re perhaps going to still see equities continue to rip higher. Stronger interest measures here, and interest rate hikes — more aggressive ones — those look out for to show that the economy is red-hot,” Streible said Friday on “Selling Nation.”

One group which could stand to benefit from gamy rates would be the banks and the broader financial sector; the category is the alternative largest in the S&P 500.

Stocks were modestly higher in the U.S. on Monday.


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