Lyon: For the first time in 25 years, the Federal Reserve model favors bonds over equity institutions and retail sentiment widens

The Zhitong Finance App learned that Lyon released a research report saying that as the S&P 500 index rose above 7,800 points and the yield on US 10-year treasury bonds reached about 5.3%, the Fed model (Fed model) changed from preferred stocks to preferred bonds for the first time in about 25 years. The bank believes that for investors who have been in the market for less than 25 years, this is a situation they have not experienced before, but the bank sees it only as an observation, not an asset allocation suggestion. Its S&P 500 model shows that there is only room for growth of about 5% over the next year.

Lyon pointed out that the actual yield of US inflation-protected bonds (TIPS) is about 3%, which is attractive. Coupled with strong profit momentum, it may temporarily prevent valuations from being further skewed towards fixed income assets, but the stock exposure of various types of investors is already at a historically high level.

The bank said that institutional investors' willingness to invest in stocks, measured by net futures positions in the S&P 500 index, fell further to its lowest level since April 2023; household stock sentiment was rarely high, and the sentiment gap between institutional investors' “fear” and retail investors' “greed” continued to widen.

The bank also pointed out that in the past 10 weeks, the leading performance of US technology stocks once again dominated market returns, with the S&P 500 outperforming weighted indices by about 10%. Yields have peaked. Currently, the actual yield of 10-year TIPS is about 3%, which may support large technology stocks that have been around for a long time, but the driving factors behind the fall in yield are critical: if driven by cooling inflation, it is favorable; if caused by macroeconomic deterioration, it is negative.

The list of key stocks in the Lyon Asia Pacific region (excluding Japan) includes Tencent Holdings (00700), Changhe (00001), BYD (01211), Shiyao Group (01093), Nongfu Spring (09633), TSMC (2330.TW), Hengli Hydraulic (601100.SH), Ningde Era (300750.SZ), SK Hynix (000660.KS), and Kia (000270.KS).