Treasury yields are climbing, pushing up toward 4.8%, and investors are taking notice. Strategists had predicted rate cuts from the Fed would ease concerns, but this time, it’s different. Data shows inflation is reaccelerating, with services prices rising.
The 10-year yield has surpassed late-2023 highs, with markets slashing expectations for further Fed rate cuts. Incoming President Trump’s fiscal policies are seen as potentially inflationary, raising concern that the “inflation genie” won’t be fully contained.
According to Fidelity Investments’ Jurrien Timmer, this could lead to higher inflation rates, potentially exceeding 4%. This scenario would limit the Fed’s ability to cut rates further. However, not all strategists share this view, with State Street Global Advisors’ Michael Arone saying earnings growth is the key driver of stock prices.
The S&P 500 has pulled back by 2.8% since its record close on Dec. 8, while the 10-year yield has climbed more than 50 basis points in that time. The market’s focus may be shifting from rate cuts to earnings growth, with investors now watching for company reports closely.
Source: https://finance.yahoo.com/news/the-10-year-treasury-yield-is-making-the-market-nervous-morning-brief-110025630.html