Last Time Bond Yields Surged Like This, Stock Markets Sank
Bond yields are rising, raising concerns about potential declines in stock markets as history suggests a troubling pattern
Bond Yields, Stock Markets, US, Equities, Inflation
New York: So, here’s the scoop. Bond yields are climbing, and that’s got folks worried about the stock market. It’s kind of a déjà vu moment, right? Last time we saw yields jump like this, stocks took a hit.
The US 10-year Treasury yield is now just under 4.7%, the highest it’s been since April. It’s been a steady rise, over a full percentage point since mid-September. That’s a big deal!
What’s interesting is that while stocks have paused a bit, they haven’t really dropped like they did in 2022 and 2023. But if those yields keep climbing, we might see some trouble ahead.
Goldman Sachs is saying that if yields keep going up without solid economic news, it could really hurt the stock market. They’re warning that the risk of a correction is higher if we get any bad news about growth.
Longer-term rates are rising the most, which shows that people are worried about US fiscal and inflation risks. It’s mostly real yields that are moving, not just inflation expectations.
There’s also chatter about what the Federal Reserve might do next. Markets are already adjusting their expectations for rate cuts, with just one small cut expected by July. The FOMC meeting minutes coming out soon might give us some hints.
Right now, many investors are feeling pretty optimistic about 2025, especially for US stocks. They’re kind of ignoring any inflation worries that might pop up from tariffs or new policies.
UBS has a strategist saying it’s all about real yields, not inflation. They think the market is really bullish on productivity improvements in the US and isn’t too worried about tariffs escalating.
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