Markets in Turmoil as Rates Rise, Forcing Investors to Flee Stocks and Bonds for Cash
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There is a bond meltdown as rates rise, causing declines in bonds and stocks. Cash is being accumulated on the sidelines.
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The Federal Reserve is trying to limit leverage and raise the cost of borrowing through quantitative tightening. This is putting pressure on markets.
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Stocks with high dividend yields now have to compete with higher bond yields, prompting a stock sell-off. Money is moving out of both bonds and stocks.
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Banks are being encouraged to build up capital reserves, likely to absorb some of the bond supply and potentially put a floor under the bond rout.
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Market volatility is expected to continue as yields rise further, dividend stocks adjust downwards, and cash builds up awaiting deployment. The jobs report will provide more clues.