It’s not the sexiest topic, but it’s one of the most important.
Treasury yields — the return on investment on U.S. debt — plays a huge role in the stock market.
Higher yields make it more expensive for companies to borrow money. Rising yields also tell investors that capital could move out of the market, causing a market downturn.
In this episode of The Bull & The Bear, I’ll tell you if the treasury yield’s current position is a sign of a market crash on the horizon.
The Benchmark: 10-Year Treasury Yields
The U.S. 10-year Treasury yield is one of the biggest economic benchmarks. When the yield rises, mortgage rates and other borrowing rates also go up. A drop in 10-year yields causes mortgage rates to fall, which has positive impact on the broader economy.
10-Year Yield Bouncing
The 10-year Treasury yield hit 1.74% in March — the highest it’s been since before the COVID-19 pandemic. Since then, yields have moved lower, which gave equity markets a boost. But a rise in inflation could push rates back up. In the last two weeks, we’ve seen yields bounce up higher than they have come down.
Watch the Treasury Market for Key Insights
Smart investors pay close attention to things like yield, yield curve and inflation because they have a connection to the stock market. Some, like prolific short-seller Michael Burry, are even betting against certain Treasurys.
I’ll tell you where interest rates are and give you insight into how the market-makers are playing the trend.
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The Bull & The Bear
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Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.