A trader works on the floor at the New York Stock Exchange. Photo: Bryan R. Smith / AFP / Getty Images
Morgan Stanley analysts described the stock market's recent correction as the "[a]ppetizer, not the main course," Bloomberg reports. They believe that higher bond yields — which, for now, have remained steady within their five-year range — could prompt bigger problems for world markets in 2018's second quarter.
Why it matters: Inflation is still rising and higher bond yields could hurt future earnings. That combination might spur another, bigger drop in the markets. Per the Morgan Stanley analyst team: “It’s when growth softens while inflation is still rising that returns suffer most."