Property Advertisement - AMO Residence for sale!

Property Advertisement - AMO Residence for sale!
Click on the banner for more details.

Search This Blog

Friday, February 9, 2018

Stock markets are falling like crazy because of rising treasury yield - Part 2

Dow Jones fell more than 1,000 points again for the 2nd time within 4 days. It fell more than 1,000 points after 10-year bond yield first reached 2.84% on 2 Feb.  10-year bond yield is at 2.85% now and the Dow Jones falls more than 1,000 points again.

High bond yields are detrimental to the stock markets but will cause USD to appreciate as the risk-free rate affects other interest rates.

https://sg-stock.blogspot.sg/2018/02/stock-markets-are-falling-like-crazy.html

USD has been appreciating because of higher bond yields which will cause other interest rates to increase.

The USA had increased its national debt by about USD$10T in the past decade (2008) and higher interest rates would increase its interest repayment burden.  This is the primary reason for the stock market fall.  The stock market will see more volatilities from now because FED has to increase interest rates gradually.

3 comments:

Eric Ho said...

The stock market has to fall more than 20% from its peak for the FED to reverse its course of interest rate hiking.

The stock market will have the problem keeping its bullish trajectory until the FED reverses its rate hiking.

Eric Ho said...

I think FED's target for 10-year bond yield is 3.5%. Therefore, FED will continue to hike interest rate until it is approaching 3.5%.

Eric Ho said...

https://www.channelnewsasia.com/news/business/fed-likely-to-continue-raising-rates--kaplan-9941514

FED is likely to continue raising rates.