Jim Cramer laments rising interest rates, says market won't advance if they keep climbing
Rising bond yields and interest rates are a concern for CNBC's Jim Cramer, who believes that the market will struggle to advance if rates continue to climb.
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Posted 9/5/2023, 11:14:19 PM
cnbc.com
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CNBC's Jim Cramer believes that China's market won't collapse despite its recent economic challenges, as he trusts the country's leadership to address the issues and prevent a complete downfall.
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.
Stocks are facing a "real" yield problem as investors become more focused on rising real yields, which could result in lower stock prices and a hit to the P/E multiple.
The yield on the 10-year Treasury bond is rising to its highest level since 2007, and this is due in part to reduced demand from foreign countries, such as Japan and China, who are diversifying their investments away from U.S. Treasurys.
The recent spike in U.S. bond yields is not driven by inflation expectations but by economic resilience and high bond supply, according to bond fund managers, with factors such as the Bank of Japan allowing yields to rise and an increase in the supply of U.S. government bonds playing a larger role.
Jim Cramer anticipates that Federal Reserve Chair Jerome Powell's speech at Jackson Hole may signal further interest rate hikes, potentially causing stocks to decline, but advises investors to keep strong companies like Apple and Nvidia and seek opportunities for discounted stocks.
Jim Cramer advises investors to take advantage of periods of weakness and buy the "best beaten-down stocks" for good buying opportunities.
The recent sell-off in US bonds has led to a rise in the yield-to-duration ratio, indicating that yields would need to increase significantly to generate losses, providing a potential floor for the struggling market.
The dollar is expected to continue strengthening as bond yields rise, with the Fed likely to hike rates at least once more this year, and a barrage of economic data this week will heavily influence Fed policy decisions and impact the direction of the dollar and interest rates.
Despite the appearance of a "Goldilocks" economy, with falling inflation and strong economic growth, rising yields on American government bonds are posing a threat to financial stability, particularly in the commercial property market, where owners may face financial distress due to a combination of rising interest rates and remote work practices. This situation could also impact other sectors and lenders exposed to commercial real estate.
U.S. Treasury yields rise as investors await jobs report for insight into the economy and Fed's monetary policy decisions.
Traders believe that the US Federal Reserve will not raise interest rates further this year, as the latest jobs report showed an increase in unemployment and a cooling wage growth, prompting the Fed to potentially halt rate hikes and keep policy on hold.
Treasury yields are on the move and investors should pay attention to where they might be headed next.
The author argues against the common belief that rising interest rates and a rising dollar will negatively impact the stock market, citing historical evidence that contradicts this perspective and emphasizes the importance of analyzing market reality rather than personal beliefs. The author presents a bullish outlook for the market, with a potential rally towards the 4800SPX region, but also acknowledges the possibility of a corrective pullback.
Investors are becoming increasingly nervous due to concerns about the Fed potentially increasing interest rates, as well as rising 10-year interest rates and the VIX, which may put pressure on stocks; however, there are also positive factors emerging, such as improving S&P 500 profit estimates and a shift away from data dependence by Fed officials, which suggests a better finish to September is probable.
CNBC's Jim Cramer advises investors to prepare for upcoming conferences and suggests getting more bullish on the stock market as the Federal Reserve nears the end of its tightening cycle, despite potential economic slowdown concerns.
Bond traders are anticipating that the Federal Reserve will continue with interest-rate hikes, and next week's consumer-price index report will provide further insight on how much more tightening may be required to control inflation.
Jim Cramer predicts that the upcoming demise of the inverted yield curve will expose all bearish investors as financial failures and that gradually increasing interest rates will not harm the economy if it remains healthy.
Investors should focus on the Federal Reserve's decision on interest rate hikes and the market's biggest themes during the coming week, according to CNBC's Jim Cramer.
Leading market experts are raising concerns about the growing US debt, warning that it will lead to higher interest rates and potential economic repercussions as federal deficits increase and US debt supply continues to grow.
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.
Treasury yields rise and stocks fall as traders anticipate longer-lasting higher rates to prevent inflation, while Brent oil briefly surpasses $95 a barrel; the Federal Reserve's decision on interest rates is eagerly awaited by investors.
CNBC's Jim Cramer advises investors not to be swayed by the gloomy sentiment on Wall Street in September, highlighting that external factors and market fluctuations can influence stock prices despite a company's solid fundamentals.
High-yield bonds outperforming relative to corporate bonds suggests a risk-on environment for stocks, according to a bullish signal in the bond market.
The Federal Reserve will continue raising interest rates until inflation decreases, even if it means more people losing their jobs, according to CNBC's Jim Cramer.
The Federal Reserve's plans for prolonged elevated interest rates may continue to put pressure on stocks and bonds, although some investors doubt that the central bank will follow through with its projections.
Investors are selling and bringing the market down due to reasons like interest rates, macroeconomic weakness, fear of giving up on gains, the Federal Reserve, the political climate, and potential strikes, according to CNBC's Jim Cramer.
Despite the recent increase in bond yields, investors are advised to continue buying Treasury yields as they are expected to rise further in the coming months.