Magical Trade
Saturday, July 2, 2022
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
Magical Trade
No Result
View All Result
Home Trade News

The Market Believes the Fed Will Have to Raise Rates Soon. What It Means for Stocks.

by
November 25, 2021
in Trade News
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter
Text size

Jerome Powell, Federal Reserve chair.

Samuel Corum/Bloomberg

Fixed-income markets are signaling that the Federal Reserve will have to increase interest rates sooner than expected, which could put a dent in the stock market.

The yield on the 2-year Treasury note has gone from 0.5% in early November to 0.64% as of Wednesday. The move suggests that investors expect the Fed to raise interest rates to combat inflation that remains higher than expected because of soaring consumer demand and supply chains that are struggling to match demand.

RELATED POSTS

How to Minimize Your Heirs’ Tax Burden on Inherited IRAs and 401(k)s

American Airlines scheduling glitch allows pilots to drop thousands of July flights

Indeed, minutes released Wednesday from the Fed’s meeting earlier this month show that members of the central bank are prepared to increase rates sooner than previously anticipated if inflation remains high.

That belief is beginning to creep into credit spreads between corporate and government debt. A Bank of America index of investment-grade corporate bonds shows that, in aggregate, the spread over Treasury yields has increased to 0.94% from 0.89% earlier this month as investors have fled corporate bonds in anticipation of rate increases that could slow economic growth and pressure profits.

Consistent with that, credit spreads for investment-grade corporate bonds in more economically sensitive sectors are rising against government debt. Ten-year bonds issues by manufacturing companies in the S&P 500 yield 1.08 percentage points more than the 10-year Treasury note, according to FactSet, an increase from the 0.99 percentage point spread seen at the lowest levels of November. The spread for corporate bonds in the energy sector has risen to 1.41 percentage points from a November low of 1.2.

“The market expects one to two [rate] hikes next year and that’s why you’re seeing credit spreads increase,” said John Ham, wealth advisor at New England Investments & Retirement Group, told Barron’s Wednesday.  

Although the major indexes are off their all-time highs, this sentiment hasn’t caused a selloff of more than 5%. The

S&P 500,

Nasdaq Composite,
and

Dow Jones Industrial Average
are down 0.1%, 1.3%, and 1.7% from their highs.  

But the pain could come if credit spreads continue to widen. “Eventually that’s going to creep back into the equity market,” Harvey said.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

ShareTweetPin

Related Posts

How to Minimize Your Heirs’ Tax Burden on Inherited IRAs and 401(k)s

by
July 2, 2022
0

The stretch-IRA strategy largely went away after the Secure Act of 2019, leaving heirs less maneuverability on taxes. Financial pros...

American Airlines scheduling glitch allows pilots to drop thousands of July flights

by
July 2, 2022
0

In this article AAL An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on...

JPMorgan Sees ‘Stratospheric’ $380 Oil on Worst-Case Russian Cut

by
July 2, 2022
0

TheStreet.com Mark Zuckerberg Makes a Dark Prediction The mood has changed at the headquarters of Meta Platforms , parent of...

Op-ed: In Putin’s evil vs. good war against Ukraine, the forces of good prevailed at NATO this week

by
July 2, 2022
0

Charred goods in a grocery store of the destroyed Amstor mall in Kremenchuk, on June 28, 2022, one day after...

American Airlines scheduling glitch allows pilots to drop thousands of July trips

by
July 2, 2022
0

In this article AAL An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on...

Next Post

Is the Stock Market Open Today? Here Are the Hours for Thanksgiving Day.

The EU is planning a 9-month expiration date on its Covid vaccine passports

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

email

Get the daily email about stock.

Please Enter Your Email Address:



By opting in you agree to our Privacy Policy. You also agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

MOST VIEWED

  • Forget Tesla — this auto stock is the one to buy right now, analyst says

    0 shares
    Share 0 Tweet 0
  • Fund manager believes FAANG is dead — says now it’s all about MANTA

    0 shares
    Share 0 Tweet 0
  • Bank of America names its top global tech stocks — including one it says has upside of 100%

    0 shares
    Share 0 Tweet 0
  • ‘Conviction sell’: UBS says avoid these global stocks amid rising headwinds

    0 shares
    Share 0 Tweet 0
  • Goldman Sachs "Will Higher Rates Put Out the Housing Fire?"

    0 shares
    Share 0 Tweet 0
  • Home
  • Trade News
  • Email Whitelisting
  • Privacy Policy
All rights reserved by www.magicaltrade.net
No Result
View All Result
  • Email Whitelisting
  • Home
  • Privacy Policy

All rights reserved by www.magicaltrade.net