Stocks are expected to outperform bonds again in the second quarter, even if the equity market turns in just a slightly higher or flattish performance.
But analysts don’t expect to see the major asset reallocation trade, predicted by many to happen when rates start to rise and investors throw in the towel on Treasurys.
The S&P 500 was up 12 percent in the first quarter . In the same period, Treasurys lost 1 percent, while corporate bonds, including investment grade and high yield, were up just above 3 percent, according to Bank of America Merrill Lynch indices.
“I think stocks are still going to win the quarter. It probably won’t be as blow-away as the first quarter was. We’re still on the lookout for a pullback, just like everyone else is at this point,” said Andrew Burkly, market strategist at Brown Brothers Harriman. “I think you end the quarter at least where we are now or even a little higher.”
For the most part, strategists said they see stocks with a positive bias in the second quarter, but as most everyone in the market says, a pullback is likely as stocks head into the seasonal “sell in May” period.
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