U.S. stocks soared to new heights on Friday amid growing investor optimism, which gave way to a new risk in financial markets: The possibility of a strong selloff in long-term U.S. government debt. Yields on long-term Treasurys — which finished at their lowest levels in at least a week — may be due for an adjustment that takes into account January’s strong economic data, easy financial conditions, and the risk of more comments by Federal Reserve officials on the need to keep fighting inflation, strategists said.
As recently as late October, the benchmark 10-year yield briefly broke above 5%, before investors and traders ended up settling on a narrative that inflation would likely keep falling in 2024 by enough to necessitate multiple interest-rate cuts by the Federal Reserve. Now, a stream of hotter-than-expected reports for January may begin to upend that thinking and risks burning anyone who had been counting on Treasury yields to fall sustainably from last year’s peak. Economists have scaled back on the odds of a U.S. recession, while the Dow Jones Industrial Average
DJIA
finished at a fresh record closing high even after losing some of Friday’s earlier momentum. Meanwhile, strategists at BofA Securities flicked at the possibility that the 10-year Treasury yield
BX:TMUBMUSD10Y
may need to rise closer to 4.5% versus Friday’s level of 4.258%. The stock market has more room to rally, said Nancy Tengler, chief executive and chief investment officer of Laffer Tengler Investments in Scottsdale, Ariz., which managed $1.2 billion as of December. She compared the curren …
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As recently as late October, the benchmark 10-year yield briefly broke above 5%, before investors and traders ended up settling on a narrative that inflation would likely keep falling in 2024 by enough to necessitate multiple interest-rate cuts by the Federal Reserve. Now, a stream of hotter-than-expected reports for January may begin to upend that thinking and risks burning anyone who had been counting on Treasury yields to fall sustainably from last year’s peak. Economists have scaled back on the odds of a U.S. recession, while the Dow Jones Industrial Average
DJIA
finished at a fresh record closing high even after losing some of Friday’s earlier momentum. Meanwhile, strategists at BofA Securities flicked at the possibility that the 10-year Treasury yield
BX:TMUBMUSD10Y
may need to rise closer to 4.5% versus Friday’s level of 4.258%. The stock market has more room to rally, said Nancy Tengler, chief executive and chief investment officer of Laffer Tengler Investments in Scottsdale, Ariz., which managed $1.2 billion as of December. She compared the curren …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]