Stock traders may be overplaying the recent rise in U.S. Treasury yields, according to Ali Miremadi, an investment director at the asset management firm GAM.
The 10-year Treasury note crossed the 1% yield threshold last week, sparking speculation that a long period of interest rate compression could be reversing. As of Monday morning, the 10-year yield sat at 1.11%.
The movement was driven by a confluence of factors, most notably the Democratic Party winning control of the U.S. Senate, which prompted expectations for heavier fiscal stimulus packages to shore up the economy.
The rise in borrowing costs prompted moves into traditional value sectors, those where share prices are relatively low versus companies' financial performance, such as energy, materials and banks.