Bond market sends troubling signal on inflation that should concern investors [View all]
The U.S. bond market sold off on Tuesday in a manner that tends to spell fresh trouble for many stock investors.
The selloff in Treasurys sent the yield on the 30-year bond to almost 5.02% and its highest closing level since May 23. Back in May, the 30-year yield’s rise above 5% was accompanied by worries about the U.S.’s fiscal outlook. By contrast, Tuesday’s moves were largely about the outlook for inflation after June data showed consumer prices rose by the most on a monthly basis since the beginning of the year.
A 30-year Treasury yield that rises above 5% tends to be negative for stocks because of the way it impacts borrowing rates for households and businesses. The yield is used as a benchmark on everything from mortgages to corporate bonds, and also provides clues on market participants’ outlook for the economy and government debt.
Among other things, Tuesday’s rise in yields sent the message that U.S. policymakers may not be able to cut interest rates in two quarter-point increments this year, as Federal Reserve officials had signaled in June.
https://www.msn.com/en-us/money/markets/bond-market-sends-troubling-signal-on-inflation-that-should-concern-investors/ar-AA1IF9Fw
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