NEW YORK (TheStreet) -- Stocks were able to erase most of their losses on Friday after the release of May's labor report, with the S&P 500 closing lower by just 0.15%. However, bonds continued to move lower as yields hit their highest levels since October.
The U.S. dollar is likely to continue its rally, Tim Seymour, managing partner of Triogem Asset Management, said on CNBC's "Fast Money" TV show. While rates can continue to go slightly higher, he argued that the upside is limited. Investors can buy the iShares 20+ Year Treasury Bond ETF (TLT) as a short-term trade.
Seymour also said investors should sell gold, which fell 4% this week; gold's future doesn't look good as the U.S. dollar continues to strengthen. Because of the strong dollar, the euro should also continue to go lower, which will benefit German equities. Because of the currency exposure, he recommended that investors buy the iShares Currency Hedged MSCI Germany ETF (HEWG).
As rates continue to rise, the consensus is that financial stocks will outperform. However, the Financial Select Sector SPDR ETF (XLF) hasn't done that well. Instead, the "layup trade" is the SPDR S&P Regional Banking ETF (KRE), said Josh Brown, CEO and co-founder of Ritholtz Wealth Management.
Regional banks are more closely tied to short-term rates than the big financial institutions are, which is why they will benefit more when bond yields go higher, Brown said.