Treasury Yields Rise As Investors Prepare For The Fed’s Decision

Definitely consider many rivals and peers to the 11 stocks above, as well as from other sectors. Homebuilders, oil producers and financials — including JPMorgan and BAC stock — also are worth looking at. Dow Jones futures and S&P 500 futures rose Friday morning, while Nasdaq futures turned lower as What Investors Are Watching After Spike In Treasury Yields the 10-year Treasury yield rebounded. The stock market rally had a wild session Thursday with the major indexes undercutting more support levels before rebounding to close higher. Now, the collective efforts of in-the-know real estate professionals will nurse the real estate market back to health.

MSNBC points out that this is the 50th week in a row that total initial claims have been higher than the worst week of the Great Recession. Despite the selloff in the high-growth tech stocks, market sentiment has held up pretty well. OPEC and its allies have reportedly agreed to keep output steady through April rather increase it by 500K barrels per day as was widely expected.


While the Federal Reserve may be trying to keep rates at bay, the long-term prospect of rising rates is still in the back of the capital markets’ minds. In the last trading session, yields crept higher following the Fed declining to extend a rule that would allow banks to hold less capital against Treasuries and other holdings. Energy companies made some of the broadest gains as oil prices edged higher, adding to a roughly 12% gain so far in February. Currency risk is the risk that fluctuations in exchange rates may adversely affect the value of a fund’s investments. Cannabis stocks surged as members of the same online forum that hyped up GameStop, AMC Entertainment and other beaten-down companies in recent weeks began encouraging each other to snap up shares in marijuana companies. Energy companies were holding up well and making some of the broadest gains as oil prices edged higher, adding to a roughly 12% gain so far in February.

Until now, senior Fed officials have stated they would overlook the recent rise in bond yields, but Fed Gov. Lael Brainard on Tuesday showed one of the first signs the Fed might be uncomfortable with the prospect of higher yields. From a sector standpoint, all U.S. sectors reported positive first quarter returns, but there was a wide margin between the top sector up 30.9% and the bottom sector up 1.1%. Energy stocks were coming off extreme lows in 2020 and energy prices were rising as the cyclical sectors began to show improvement. Financials were up solidly due to the increase in the yield curve, which made bank margins expand.

Accelerating Growth

Eastern close, and hit an intraday peak at 1.558%, according to FactSet data. The dividend yield for S&P 500 companies in aggregate was at 1.5%, by comparison, while the Dow it is 2% and for the Nasdaq Composite is 0.7%. “After the big run-up in the first half of February folks have been looking for an excuse to take profits,” he wrote, describing February as the weak link in what’s usually the best six-month period of gains for the stock market. Yet, for all the bellyaching about yields running hotter than expected, stocks in February still managed to bang out solid returns.

Last week, as interest rates soared, inflation expectations receded to around 2%. The market is expressing fresh optimism about an economic recovery with little concern that inflation will start raging out of control. The muted Forex Trading For Dummies By Optionrally market action follows a string of record highs for the major stock indexes. The recent calm in the Treasury market contrasts with early-year selling that pushed yields to their highest levels since the pandemic started.

Suddenly Wealthy From Markets, Some Millennials Are Stressed

A major change in Fed policy is one factor that could stop the yield curve steepening. The central bank could potentially focus on lower longer-term yields through targeted maturity purchases, similar to the Bank of Japan’s target of a 0% yield on the 10-year Japanese government bond. The Fed could also move forward expectations for a slowing of QE and eventual rate hike if labor market improvement and inflation meaningfully exceed current expectations. Before the GFC, the yield curve steepened when the Federal Reserve cut interest rates and short-term yields decreased in line with the federal funds rate, while the fall in long-maturity yields was not as pronounced. Since the Fed slashed rates during the GFC, the federal funds rate has stayed at much lower levels and changed the dynamics of yield curve steepening. The near-zero federal funds rate now holds short-term Treasury yields nearly steady as longer-maturity yields fluctuate in response to market expectations for economic growth and inflation.

  • The recent calm in the Treasury market contrasts with early-year selling that pushed yields to their highest levels since the pandemic started.
  • Brent crude has surged by over $3 per barrel, to above $67, following a report that Saudi Arabia has offered to extend its voluntary output cuts by another month, into April.
  • ALPS Distributors, Inc. is not affiliated with either FS Investments or any of its affiliates.
  • Bond yields, which had been steadily ticking higher, continued to inch back from the highs they hit earlier in the month.

Treasury yields continued to climb, adding to a multi-week increase in rates that are used as benchmarks for many kinds of loans including corporate debt and traditional 30-year mortgages. The yield on the 10-year Treasury note rose to 1.42%, the highest level in just over a year. The Dow Jones Industrial Average fell 0.2% and the technology-heavy Nasdaq Composite, which has taken a bigger blow in recent days from rise in bond yields, was down 0.8%. With that said, the upward movement already seen in longer-term rates has been significant. Few shifts in capital markets occur in a straight line, and it is possible that we will see some consolidation before moving higher.

Powell In The Spotlight

U.S. government-bond yields climbed Thursday after data showed the number of Americans filing for unemployment fell to a new post-pandemic low. Start, and end, your trading day right with TheStreet’s ‘Daily Snapshot’ on your favorite smart-speaker. Learn more about TheStreet’s market coverage What Investors Are Watching After Spike In Treasury Yields for your trusted smart-speaker here. fell 7% after the Canadian cannabis company said it would offer $400 million worth of convertible senior notes to be used for working capital, to fund acquisitions, and to repay a $9.1 million mortgage on a production facility in British Columbia.

With these advance warnings, real estate professionals had an opportunity to prepare for the 2020 recession, which began officially in February 2020. “One of the Fed’s biggest challenges is to convince the market that certain inflation data will temporarily rise, especially due to fundamental impacts and supply chain bottlenecks.” He said. The 10-year Treasury yield temporarily exceeded 1.65% on Wednesday morning as investors ‎commsec Mobile On The App Store prepared for the latest Federal Reserve Board of Governance policy decisions later that day. Individual investors and endowments may have different investment horizons, liquidity needs and risk tolerances. In addition, fees that may be incurred by an investor in any of the funds sponsored by FS Investments may be different than fees incurred by an endowment investing in similar assets as those in which the funds invest.


Scroll to Top