Call it a bond yield bounce.
U.S. Treasury yields turned higher on Thursday following news that U.S.-China trade talks were to resume in October, mirroring a broad-based move up in the stock market. The yield on the U.S. 10-year Treasury rose to 1.57%.
And, lucky for yield-hunters, this positive action "could last for a little while," says Matt Maley, chief market strategist at Miller Tabak.
"Yields have been going down all year, and there's been a good reason for that," he said Thursday on CNBC's "Trading Nation," pointing to Wall Street's concerns around slower growth, U.S.-China trade, Brexit and other geopolitical issues.
Those worries have led to what Maley called "artificial buying" in the bond market, with investors flocking to bond-based mutual funds and other investments in the interest of hedging their existing positions. That action caused a 12% spike in the iShares 20+ Year Treasury Bond ETF (TLT) in August, a move rarely seen in the Treasury market.
"Now that some of the artificial buying has pulled back, it should lead to a bounce in interest rates and a sell-off in the bond market," Maley said.
That theory is not only supported by the moves in the TLT — which, as of Thursday, was the most overbought it has been since its inception in 2002 — but by bond yields themselves, the strategist said.
Ten-year yields, for example, are "the most oversold they've been since 1998," Maley said.
"These are kind of the streams I think will lead to tradeable moves, not just ones that'll last for a couple of days," he said. "I'm not necessarily saying it's the end of the whole move [and] rates are going to go straight up from here, but I do think it's one that'll last for a while."
Indeed, the 10-year yield did decline slightly on Friday, to 1.553%.
For Mark Tepper, president and CEO of Strategic Wealth Partners, "all the easy money in Treasurys has already been made."
"As an investor, it's important to understand that the 30-year yield is pretty much in line with the dividend yield on the S&P 500 right now. So, which would you rather own over the next 10 years?" he asked during an interview on the same segment. "You're getting the same yield with a growth component if you invest in stocks."
And if the stock market rally holds and sends the S&P back to its all-time high around 3,025, yields will follow, Tepper said.
"Right now, all eyes are on the Fed. If the Fed cuts as expected, I think the yield curve eventually straightens out," he said. "And, in my opinion, ... the opportunities right now are much more attractive in the stock market."
The Fed meets Sept. 17-18.