We think higher yields will slow the stock market’s rally

The recent surge in the S&P 500, to within striking distance of our long-standing end-2021 forecast of 4,200, has coincided with long-dated Treasury yields stabilising after their sharp rise earlier this year. Nonetheless, we’re sticking, for now, to our forecast for the stock market index, because we anticipate that the sell-off in the bond market will resume in due course and that this will slow down stock market gains.