10/29/2023 0 Comments Obsidian financial services incTreasury yields rose to their highest level in over a decade earlier this week, before edging lower on a cooldown in employment data on Wednesday.Ī flurry of new government debt issuance has also inundated the bond market, pushing prices downward. The Fed last month signaled that it will likely raise rates once more this year and keep them elevated through 2024, accelerating the surge in yields. “A lagged impact in higher rates is going to lead to weaker growth in the quarters ahead,” he said. Miskin says expectations that corporate earnings will bounce back to that extent may be overly hopeful. Rising yields reflect investor confidence in the economy’s growth.Īnalysts expect 12% growth in earnings year-over-year in 2024, according to FactSet. “Investors really came into this year positioned for a recession,” said Noah Wise, senior fixed income portfolio manager at Allspring Global Investments.īut the economy has stayed strong, and expectations that it will accelerate next year as rates stay higher for longer has spurred the surge in yields, says Matt Miskin, co-chief investment strategist at John Hancock Investment Management. If it ends lower for the year, that would mark the first time the fund has seen three consecutive annual declines. The iShares Core US Aggregate Bond exchange-traded fund, which tracks the performance of US investment-grade bonds, is on pace to end 2023 lower. The S&P 500 and Nasdaq Composite indexes are still positive for the year, but have each fallen about 4% over the past three months.Īs stocks have declined and bond yields have soared, bond prices have tanked, causing pain for investors who bet that the Fed would curtail its rate-hiking campaign earlier this year. ![]() ![]() The Dow Jones Industrial Average index on Tuesday gave up the last of its 2023 gains, and is now roughly flat for the year. The spike in yields has soured investors’ mood on Wall Street over the past few months after what had been a strong first half of the year for stocks. The surprisingly strong economy has led investors to worry that the Fed will keep rates higher for longer, which, in turn, drove US Treasury yields higher. The US economy and labor market have shown few signs of cracking, even after the Federal Reserve’s punishing campaign to tame inflation sent interest rates to their highest level in 22 years. ![]() The bond market is back in the doldrums after a promising start to 2023.
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