Worried about the impact of U.S. Treasuries? Bank of America Merrill Lynch: This is the "golden pit" for bottom-fishing AI U.S. stocks

U.S. Treasury yields continue to impact the market, and U.S. stock AI concept stocks may face an excellent bottom-fishing opportunity. Due to concerns about inflation, the yield on the U.S. 10-year Treasury bond continues to rise, approaching the 5% mark, and the correlation between the stock market and bond yields has turned negative. In a research report released on January 14, Bank of America analysts Gonzalo Asis and others stated that in the long term, the stock market pullback under the impact of U.S. Treasuries can help investors eliminate AI bubble risks in advance, and now may be a "significant buying opportunity." Bank of America noted in the report that during the tech bubble, tech stocks not only withstood significant macroeconomic shocks but also achieved an annual return of 80% when the yield on the 10-year U.S. Treasury bond was above the current level. Short-term Risks vs. Long-term Opportunities Bank of America stated in the report that when the yield on the 10-year U.S. Treasury bond exceeds 4%, the correlation between this yield and the S&P 500 index turns negative, thereby putting upward pressure on the stock market. Data from the report shows that in the four largest sell-offs in S&P history, three were accompanied by the yield on the 10-year U.S. Treasury bond rising to 4.5% or higher. However, Bank of America believes that if this bond yield-driven stock market impact can help investors eliminate AI bubble risks in advance, it may become a significant buying opportunity. First, the report states that looking back at the tech bubble of the 1990s, these types of stocks have a strong resistance to macroeconomic shocks, withstanding the Asian financial crisis and significant interest rate hikes by the Federal Reserve at that time, achieving over 80% returns in 1998. Secondly, during the entire tech bubble period from 1995 to 1999, both the nominal and real interest rates of the 10-year U.S. Treasury bond were higher than they are now. The report states that as long as the U.S. remains the main driver of global growth, its debt issues are unlikely to fully explode. Finally, the report mentioned that the last time technology stocks faced difficulties was in 2022, but at that time it was more due to corporate earnings rather than the drag from the bond market. Therefore, as long as corporate earnings remain strong, technology stocks, especially AI stocks, will still have a strong ability to withstand the impact of the bond market.