Wall Street divided on equity and bond outlook

    The COVID-19 pandemic has created increasing uncertainty, with the expectation that a vaccine will be rolled out to bring the outbreak under control. The number of cases in many countries is still increasing, suggesting that there is still a lot of room for error. At the same time, there are also concerns that the economic recovery will gradually weaken once stimulus policies are withdrawn.

    Take the dispute between value and growth stocks as an example, Societe Generale and JPMorgan see value stocks would continuing to outperform at this stage of the market cycle, while Prudential Financial and AlphaOmega Advisors LLC see a pullback in value stocks. In addition, Wall Street institutions are also divided on the outlook for the US dollar and US Treasury bonds.

    The uncertain outlook is also becoming more pronounced in the U.S. Treasury market. Among the bears, JPMorgan Asset Management was saying the "right place" for the U.S. 10-year yield should be around 2% after the recent volatility in the bond market; HSBC took a different view. The bank's head of fixed income research, Steven Major, said last week that U.S. 10-year yields will fall to 1 percent by the end of the year, as the economic recovery from stimulus is not enough to bring about a lasting rebound in price pressures.