Stocks have taken a hit as investors adjust their portfolios to take advantage of more attractive bond yields
What will happen next to bond yields and interest rates? And how should that influence what investors do with their spare cash?
But will rising yields influence the Federal Reserve decision making on interest rates? Some analysts say yes. “‘If you need the cash for a down payment on a house in the next 18 months then placing it in a 2- or 3-year Treasury probably won’t work.’” “Retirees drawing down their money may be in ‘statement shock’ now, amid the lower prices in the bond market where they’ve built up exposure.”
Also see: Treasury yields are climbing: ‘There’s never really been such an attractive opportunity for fixed-income investments’Suppose the Fed decides it’s done tightening and later cuts the rate. Now suppose there’s someone who bought longer-term Treasurys at today’s higher yields and then decided to sell at a time of falling interest rates.
Now suppose the Fed isn’t done with interest rates. The benchmark rate is at a two-decade high with its 5.25% to 5.50% target range, and Fed Chair Jerome Powell recently reiterated that the central bank will follow the economic data to determine its next move.
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