FHI - BofA makes financial stock recommendations for high rates/inflation scenarios

As Treasury yields continue to rise — the 10-year Treasury yield has increased 73 basis points in the past three months to 1.63% late Friday's afternoon  — talk of inflation also increases.BofA Securities analyst Michael Carrier takes a look at what the implications are for the capital markets sector and looks at a couple of scenarios."Given the recent rise in medium/long rates, our strategy teams forecast for even higher rates and higher inflation ahead and a potential Fed mover sooner rather than later," he writes in a March 24 note.Higher long rates driven by economic growth: He sees as "generally positive" for cap markets, but may not be as dramatic a change as for short rates; prefers Goldman Sachs (GS) and Morgan Stanley (MS) on strong activity levels; CME Group (CME) on increasing rate volumes, and Schwab (SCHW) for positive net interest income impact.Higher short rates: The most positive scenario

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BofA makes financial stock recommendations for high rates/inflation scenarios