Treasury yields shot up last year, and investors flocked to allocating to cash which have yielded around 5% or even more. Morgan Stanley Investment Management's Jim Caron believes the 10-year Treasury yield is very likely to hover between 5% and 5.5%. Caron, who is chief investment officer at its Portfolio Solutions Group, explained that historically, 10-year Treasury yields are "usually a good match" for nominal gross domestic product. How rising yields affect stocks But are rising yields bad for stocks, as commonly thought? "If yields are rising because the economy is running hot, and data and labor markets are stronger, the rising yields need not negatively affect stocks."

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Persons: Morgan Stanley, Jim Caron, Caron, CNBC's Organizations: Treasury, U.S . Federal, Morgan, Morgan Stanley Investment, Solutions Locations: U.S