Spike in global bond yields a warning sign of market fragility despite strong earnings cycle: Citi

• Market complacency is a concern, with significant rises in commodity prices, bond yields, and equity prices since recent conflicts.
• Vulnerabilities include continued bond yield increases impacting stocks and 'artificial' commodity prices, with oil potentially reaching $150+ if the Strait of Hormuz is closed.
• Recommends selling bonds, buying commodities, and being cautious with equities; the US market looks 'expensive' while Asian equities (Japan, Korea) and emerging markets offer better value.
• The Bank of Japan is seen as 'falling behind the curve' with its policy, a situation that should serve as a warning to the US Federal Reserve given high inflation and robust economic activity.

Citi's Jim McCormick warns of market complacency and fragility, citing significant rises in commodity prices, bond yields, and equity prices. He advises caution in equities, particularly in the US, while seeing value in Asian and emerging markets, and recommends buying commodities. He also highlights the Bank of Japan's risk of falling behind the curve.