Bet on these stocks to outperform as bond yields surge, top investor says

Bet on these stocks to outperform as bond yields surge, top investor says

A surging bond market triggered a stock sell-off on Wall Street this week.

The 10-year Treasury note briefly crossed above 1.6% on Thursday, its highest level in more than a year. It traded at just under 1.5% on Friday.

"The yield curve has steepened so you want to own banks," Nancy Tengler, chief investment officer at Laffer Tengler Investments, told CNBC's "Trading Nation" on Thursday. "Our pick would be JPMorgan. They just put in place in the fourth quarter a negative $2 billion loan loss provision. That that hasn't happened in five years and they get half their revenue from interest income and the other half from noninterest so it's a great hedge."

A steepening yield curve benefits the banks as they can borrow at a cheaper price while lending at higher rates of interest. JPMorgan, Tengler's pick, has risen nearly 17% so far this year.

"We also like names like BHP. First of all, you get a high yield of 5.1% plus dividend growth, and you get the super-cycle commodity play that will benefit as the economy grows and even as a hedge against inflation," Tengler said.

Oil stock BHP is up more than 17% in 2021, driven by the rally in crude oil