A strengthening dollar, along with falling Treasury yields, could cause the market to end the summer on a low note and at the very least, will put a cap on any potential advance in financial and energy stocks, Deutsche Bank told clients. The investment bank provided a list of equities that could be poised to outperform during any coming volatility.
Deutsche Bank equity strategist David Bianco predicts that yields on the 10-year Treasury could remain under 2 percent well into next year, while a strong dollar is "inevitable." He also noted that when the S&P 500 posts a new high in July or August, the average pullback before November is 8 percent.
"Chasing summer rallies is risky," said Bianco, urging investors to remain selective, and stick with those names that are less sensitive to the dollar's direction.