US stocks attract $24 billion despite mixed signals

There is currently no strong support for Treasury yields to drop, despite efforts from Treasury Secretary Scott Bessent. He is focused on lowering yields to give the government more flexibility in spending. However, some market analysts believe Bessent has limited power over long-term Treasury yields. Recently, financial analysts at major banks have adjusted their forecasts for 10-year yields, citing Bessent's efforts to push them lower. They believe that Bessent can take actions like reducing the size of certain debt auctions or changing regulations to encourage bond demand. However, opinions vary on how effective these measures will be. Bessent is utilizing a strategy that involves issuing more short-term bills and fewer long-term bonds. This has been criticized in the past but is now being actively pursued. Some experts suggest this might work for several years, giving the government more time to lower long-term rates. Additionally, there are discussions around easing regulations to encourage banks to buy more Treasuries. If banks are required to hold less capital against Treasuries, they may invest more in those securities. There are also possibilities of the Federal Reserve restarting quantitative easing if needed. Despite these strategies, many believe they only serve as temporary solutions. If the government's fiscal situation does not improve, the measures may not prevent future issues with rising yields. Meanwhile, there is a sense of contradiction in the market regarding US stocks. Despite a report showing a decrease in fund managers' optimism about US equities, there has been a significant influx of capital into US stock funds recently. This suggests that many investors remain confident in the stock market, even amid concerns. Markets often react unpredictably to news, and in this case, the recent positivity in stock flows may indicate that many are not taking the bearish sentiment seriously.