Merrill Lynch & Co. strategists said Thursday they expect a shift in assets from stocks to bonds.

"We don't know whether we are definitely at the top of the yields in the bond markets, but the value of 5.94% on the (Treasury) long bond is enormous," said Cheryl Rowan, senior investment strategist.

Ms. Rowan was amplifying comments made by Merrill Lynch's chief investment strategist, Charles Clough, during a CNBC interview earlier in the day.

"Risk-reward is really shifting back toward the bond side," he said. "We might as well stay cautious in here for a bit."

Merrill Lynch researchers say they believe equities are trading at "very high valuations on very bad earnings," Ms. Rowan said.

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