📉 Money managers who loaded up on US government bonds as a bet against recession are now facing subpar returns and a deepening selloff as Treasury yields rise.
📉 The annual return on US government bonds turned negative last week as Treasury yields reach a 15-year high, suggesting that interest rates will remain elevated and the economy can handle it.
📉 Bob Michele, CIO for fixed income at J.P. Morgan Asset Management, remains undeterred and is buying every dip in bond prices.
📉 Other prominent money managers, including Allianz Global Investors, Abrdn Investments, Columbia Threadneedle Investments, and DoubleLine Capital, believe that the impact of Federal Reserve rate hikes is just starting to be felt by the economy and predict a recession.
📉 Fund managers are making adjustments to duration to hedge their positions, with some shortening duration while others maintain overweight positions.
📉 Historical patterns suggest that rate hikes often lead to slumping economies, but it remains uncertain whether yields will follow the same pattern this time.
📉 The borrowing needs of wealthy economies and the flood of debt issuance may lead to higher yields.
📉 Despite the current environment, some funds that took short bond, long stock positions have faced significant drawdowns, indicating that rates may remain elevated.
📉 J.P. Morgan's Michele is confident that bond yields will fall once the Fed finishes its tightening cycle, even before the first rate cut.
Surging U.S. Treasury yields are causing concern among investors as they wonder how much it will impact the rally in stocks and speculative assets, with the S&P 500, technology sector, bitcoin, and high-growth names all experiencing losses; rising rates are making it more difficult for borrowers and increasing the appeal of risk-free Treasury yields.
U.S. Treasury yields rise as investors await jobs report for insight into the economy and Fed's monetary policy decisions.
U.S. stock futures decline as bond yields rise despite weak economic news from China and Europe.
U.S. Treasury yields dropped as concerns over potential interest rate hikes grew due to recent economic data, including lower jobless claims and sustained inflationary pressures.
The yield on the 10-year Treasury note is predicted to decrease significantly for the remainder of this year and in 2024, as economists anticipate the Federal Reserve to loosen its monetary policy and inflation to fall.
The Federal Reserve's continued message of higher interest rates is expected to impact Treasury yields and the U.S. dollar, with the 10-year Treasury yield predicted to experience a slight increase and the U.S. dollar expected to edge higher.
U.S. stocks fell and Treasury yields surged ahead of the Federal Reserve's interest rate decision, while Instacart shares surged 12% on their first day of trading on the Nasdaq.
Treasury yields are expected to rise in the future, which could have a negative impact on the stock market.
U.S. Treasury yields rose as investors considered future interest rates and awaited economic data, with expectations that rates will remain higher and uncertainties surrounding a potential government shutdown and the upcoming Fed meetings.
Stock futures declined and Treasury yields moved higher as belief grows on Wall Street that the Federal Reserve likely will keep interest rates higher for longer.
Wall Street falls despite bond market pressure easing, with stocks on track for their fifth drop in six days as the market comes to terms with the Federal Reserve's decision to keep interest rates high, causing yields in the bond market to rise and undercutting prices for stocks and other investments.
The U.S. stock market has experienced a decline due to conflicting economic news and a surge in bond yields, which may be driven by factors other than data, such as fiscal deficits and central bank policies.
Stock futures are falling as oil prices surge and the yield on the 10-year Treasury remains near levels last seen in 2007.
Yields in the bond market are rising due to several factors including higher inflation premium, hawkish Fed policy, rising energy prices, and increased Treasury debt issuance.
The recent surge in bond yields, with 10-year Treasury yields hitting levels not seen in over 15 years, is impacting the stock market as investors shift their focus to safer bond investments, which offer higher yields and less volatility than stocks.
Rising Treasury rates and oil prices are creating an unfavorable situation for consumers, investors, and the economy, making it challenging for the Federal Reserve to manage inflation without causing a recession. The potential for a "soft landing" and decreased inflation remains, but the economy should prepare for possible sector-by-sector recessions and a full-blown recession, along with government shutdowns and fiscal policy disputes becoming normal occurrences. The discrepancy between short-term and longer-term rates controlled by the Fed has gained importance, with higher borrowing costs disrupting the stock and bond markets. In this volatile period, long-term investors should hold on and ensure they have enough money saved to weather the storm. While the Fed has pushed short-term rates higher, it has also benefited savers with higher yields on money market funds, short-term Treasury bills, and high-yield savings accounts. However, a strong dollar has impacted S&P 500 earnings, leading to a struggling stock market and increased costs for imports and exports. Rising interest rates pose the greatest economic challenge, affecting consumer loans and dampening spending. Traders who bet on long-term bonds have faced losses due to rising rates, highlighting the inverse relationship between interest rates and bond prices. As a result, it may be advisable to purchase shorter-term Treasuries and keep bond durations lower. The surge in bond yields has also disrupted stock investors' expectations of controlled inflation and the Fed's tightening, leading to stock market losses. The economy and markets may experience more turmoil, as there are various factors beyond the Federal Reserve's control.
U.S. stocks and bonds are falling due to another surge in Treasury yields, leading to anxiety among investors who fear that the Fed will hold interest rates higher for longer if the labor market remains strong.
Treasury yields continued to rise, reaching the highest levels since before the 2007-2009 recession, as investors demand more compensation to hold Treasuries and the bond-market selloff deepens, which has impacted stock markets and wiped out gains.
The article discusses the recent rise in Treasury yields and explores the positive aspects of higher bond yields.
Treasury yields dropped from multiyear highs after new jobs data indicated a potential weakening labor market, raising hopes that the Federal Reserve may halt interest rate hikes and leading to a relief rally in stocks.
Yields on U.S. Treasury bonds are rising uncontrollably, causing ripple effects in financial markets, as the 10-year Treasury yield reaches its highest level since August 2007, resulting in plummeting bond prices and impacting various assets such as stocks and gold. The rise in Treasury yields is attributed to factors such as the U.S. government's expanding budget deficit, the Federal Reserve's quantitative tightening program, and its restrictive stance on interest rates.
Stocks fell sharply in response to an increase in long-term Treasury yields, driven by misguided rhetoric from Fed officials and fears of higher inflation, despite economic data showing slowing growth, low job growth, and declining wage growth.
U.S. stocks turned higher and Treasury yields eased as investors awaited the monthly jobs report from the Labor Department, with caution surrounding the potential impact on stocks and the Federal Reserve's rate hike plans.
Federal Reserve officials are not concerned about the recent rise in U.S. Treasury yields and believe it could actually be beneficial in combating inflation. They also stated that if the labor market cools and inflation returns to the desired target, interest rates can remain steady. Higher long-term borrowing costs can slow the economy and ease inflation pressures. However, if the rise in yields leads to a sharp economic slowdown or unemployment surge, the Fed will react accordingly.
The rise in Treasury bond yields above 5% could lead to a more sustainable increase and potential havoc in financial markets, as investors demand greater compensation for risk and corporate credit spreads widen, making government debt a more attractive option and leaving the stock market vulnerable to declines; despite this, stock investors appeared unfazed by the September jobs report and all three major stock indexes were higher by the end of trading.
Long-term bond yields have surged as the Federal Reserve reduces its bond portfolio and the U.S. Treasury sells debt, contrary to the expectations of Wall Street and investors worldwide, but a research paper written by a University of Michigan student six years ago accurately predicted this scenario.
Investors' nerves were settled by dovish remarks from Federal Reserve officials, suggesting that rising yields on long-term U.S. Treasury bonds could have a similar market effect as formal monetary policy moves, potentially reducing the need for further rate hikes.
Treasury yields plummet as bond market braces for a shift in Federal Reserve policy.
U.S. Treasury yields fell as investors turned to safer investments amid concerns over the Israel-Hamas war and hints from Federal Reserve officials that there may not be a need for further rate hikes.
U.S. stocks rise as Treasury yields fall and Federal Reserve officials provide favorable commentary, with the Nasdaq Composite leading gains.
Treasury yields dropped sharply as traders priced in a high likelihood that the Federal Reserve will not raise interest rates again, with the 2-year rate ending at its lowest level in over a month and the 10-year and 30-year rates also hitting lows.
Treasury yields have fallen from their recent highs, but the market's "pain trade" may not be over yet, as weak economic data and the upcoming inflation report could keep yields from coming down and staying down.
Stocks are up and U.S. interest rate expectations are lower as a result of several Fed officials suggesting that rising yields may be helping their fight against inflation.
Investors are closely monitoring the bond market and September CPI data to determine the Fed's stance on interest rates, with Seema Shah of Principal Asset Management highlighting the circular nature of market reactions to yield spikes and their subsequent declines. She suggests that while there are concerns about upward momentum, the equity market will find comfort in a continued drop in yields and could remain range-bound for the rest of the year. Diversification is recommended as the market narrative remains unclear, and investors may consider waiting until early 2024 for greater clarity on the economy and the Fed's actions.
Bond market strategists are maintaining their predictions that U.S. Treasury yields will decrease by the end of the year and that 10-year yields have reached their peak, despite recent sell-offs and a strong U.S. economy.
Stocks declined and bond yields surged after an underwhelming Treasury auction and higher-than-expected inflation reading raised concerns about higher interest rates.
US stocks fall as fears of war in the Middle East and hopes for stronger profits at big US companies collide in financial markets; oil prices rise and Treasury yields fall, creating uncertainty in the market.
Treasury yields rise and stock struggle as positive economic reports support the argument for the Federal Reserve to maintain higher interest rates for a longer period of time.
Bond yields have surged as investors realize they are a poor hedge against inflation, while stocks are a much better option, according to Wharton professor Jeremy Siegel.
