Feb 18, 2021 01:21 AM EST
Interest rates are anticipated to keep going higher, but this is not really because of inflation, as many believe. In addition, the interest rates are not going so high that they slay the stock market.
Last week, treasury yields have already been rising rapidly, and the benchmark 10-year-yield has literally been on fire. It reached as high as 1.33% in the early hours of February 17 and then it retreated a bit down to 1.3%, as reported by CNBC.
Yields move the opposite of price, and the 10-year has risen from about 1.15% the previous week to levels already near the rate when the pandemic was starting to bulldoze the economy.
The 10-year is key to the economy, since it has he capacity to affect ortgages and other consumer and business loans.
Bond strategists claimed that the present movement in yields has opened the door for the possibility of higher move. They claimed that the next logical target for the 10-year is 1.5%.
Analysts also deemed that the yield is unlikely to go much higher in the near term unless inflation incerases. If not, this will only possible if there is a signal from the Fed that it is prepared to finally tighten policy, which is highly improbable givent eh current economic situation.
"I think it's reflective of economic conditions, which is why other financial assets, like equities, aren't taking it too badly," shared Jim Caron, who is the head of global macro strategy at Morgan Stanley Investment Management.
"The thing is you ain't seen nothing yet," he said.
He believes that once President Biden's stimulus package is finallyr rolled out, this is the time people can truly see some dramatic rises.
"That's with a $600 stimulus check. What about with a $1,400 stimulus check in hand?," he asks.
His sentiments are echoed by others. Because it seems that President Biden's plan will push through eventually, and vaccine rollouts are expected to lower the COVID-19 cases, it will be hard to contain people's spending for sure.
"Stimulus checks are coming, jobs are coming back. We think this is all going to happen as Covid numbers start to fall," Caron of Morgan Stanley said.
"We're still going to get that $1,400 check," he said. "Plus, there's pent-up demand. The party's just getting started," he explained.
This is why some investors are already worried.
They believe that once a big stimulus package is rolled out, this will be igniting inflation and leave the U.S. struggling under a mountain of debt soon enough.
We've got stimulus already done which is making people spend, and stimulus to come which will spur more spending," said Michael Schumacher, head of rate strategy at Wells Fargo Securities. "Inflation has been a talking point for the last few weeks," he added.
Following the pandemic, natural calamities, and major employment shifts, a startling new study on the online news site News Nation shows that 1 in 4 Americans don't have an emergency fund.
Generational wealth is a facet of wealth management that is often misunderstood. Labeled trust fund babies, rich kids, and lucky breaks, those who receive an inheritance from families are rare.
Social media has successfully made it to the mainstream consciousness of over half the global population. DataReportal's latest study shows that over 4.33 billion people worldwide are using some form of social networking site this year. That's why it's no wonder many tech companies are interested in investing or forming the next Facebook, Twitter, or YouTube to capture the hearts and minds of the general population.
Ease of access, freedom to choose in which to invest the money and lines of credit designed according to the needs of consumers, are some of the characteristics that have made consumer credit one of the most important financing products in the world’s market.
While researchers have suggested that individuals who base their self-worth on their financial success often feel lonely in everyday life, a newly published study by the University at Buffalo and Harvard Business School has taken initial steps to better understand why this link exists.
The younger generations are willing to put their money where their mouth is when it comes to sustainable living.
An international research team led by NUST MISIS has developed a new iron-cobalt-nickel nanocomposite with tunable magnetic properties. The nanocomposite could be used to protect money and securities from counterfeiting. The study was published in Nanomaterials.
Bank credit officers are more likely to approve loan applications earlier and later in the day, while 'decision fatigue' around midday is associated with defaulting to the safer option of saying no.
After graduating or leaving college, many students face a difficult choice: Try to pay off their student loans as fast as possible to save on interest, or enroll in an income-based repayment plan, which offers affordable payments based on their income and forgives any balance remaining after 20 or 25 years.