US stocks and bonds to rally "before long," Capital Economics says By

-- US stocks have mt4 official website for Android download and installheld up well in the face of a sell-off in Treasury bonds over much of the past month and are due to rally once again "before long," according to analysts at Capital Economics.

Treasury yields have been on the rise in recent days as investors reassess the outlook for the speed and depth of the Federal Reserve's expected interest rate cutting cycle.

The Fed slashed rates by an outsized 50 basis points at its last meeting in September, with markets pricing in more reductions at the central bank's final two gatherings this year. However, with recent data pointing to resilience in the US economy and labor market, traders have started to ponder if the Fed will choose to slow the pace of further cuts.

Analysts have also cited an increase in the prospects that Donald Trump will win a second four-year term in the White House in the all-important Nov. 5 US presidential election as a provider of upward momentum for Treasury yields.

On Monday, the yield on the benchmark 10-year Treasury note touched its highest mark since July 11, while its rate-sensitive 2-year counterpart rose above 4.16% for the first time since early August. Yields typically move inversely to prices.

Markets are now keeping an eye on a raft of fresh economic data as well as a host of corporate earnings reports this week. A rise in Treasury yields can discourage consumer and borrowing activity, possibly denting growth and unnerving stock investors.

Yet, in a note to clients, Capital Economics Senior Markets Economist Diana Iovanel noted that the sell-off in Treasuries has not dampened sentiment "too much" around the benchmark .

"To be sure, if yields continued to rise rapidly, or stayed high for a prolonged period, that would probably put equities under more serious pressure," Iovanel said. "But our central scenario remains that yields will fall back, given our view that the US will face [a] 'soft landing' and assuming policy continuity."

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