hit counter html code

Bonds are issuing a warning about mounting US debt, said veterinarian Ed Yardini, and markets will be affected if Treasury yields rise much more.

NYSE trader worried

A trader interacts while working on the floor of the New York Stock Exchange (NYSE) in New York, US, March 18, 2020.Lucas Jackson/Reuters

  • Ed Yardini said the bond market is sending a warning about mounting US debt.

  • This is seen in the rise in bond yields, with the yield on the 10-year Treasury note exceeding 4%.

  • Yardini warned that returns could reach 4.5% this year and lead to a sell-off in stocks.

The bond market is issuing a warning about the US debt problem, and stocks could face a sell-off as Treasury yields continue to rise, according to market veteran Ed Yardini.

Yardeni’s head of research pointed to the increasingly attractive yield on bonds, with the yield on 10-year Treasury bonds recording 4.213% on Wednesday. Yardini said this is a sign that markets expect higher economic risks over the next decade – largely due to America’s staggering debt load.

“The problem is, the bond market now cares a lot about the federal deficit, and as we all know, fiscal policy is very wasteful. We have a growing federal deficit and a growing debt,” Yardini said. Fox Business Wednesday.

the The US federal debt stock has reached $32 trillion for the first time this year. Growing debt is less of a concern during recessions, when the government may ramp up spending to stimulate the economy, Yardini said, but debt growing rapidly while the economy is on track to achieve a 5% expansion is a concern.

Higher bond yields can also create problems for equities, because they influence investors to move away from equities and make it more expensive for companies to service their debt. Yardini predicted that the 10-year Treasury yield could exceed 4.5% this year, a move that could send the S&P 500 lower to its 200-day moving average at around 4,121.

He added that this means a 7% drop from current levels, but a 10% sell-off is possible.

“I’m a big fan of neural bonds because we have a very important technical level here,” Yardini said. “It could be bad hard,” he added.

The Fed has indicated that it may soon be ready to cut real interest rates, but steady inflation remains a risk that could change that calculation. Investors priced in an 89% chance that the Fed will hold interest rates level at its September policy meeting, and a 21% chance that the Fed will start cutting rates early next year, according to CME FedWatch tool.

Read the original article at Business interested

Related Posts

“Is that a curtain?”: Internet roasts ‘worst’ outfits at Jeff Bezos and Lauren Sánchez’s wedding

When the ultra-rich come together to celebrate, the fashion stakes are sky-high — and sometimes, delightfully unexpected. As Jeff Bezos and Lauren Sánchez began their lavish wedding…

Canadian Prime Minister issued blunt response after Trump accuses them of ‘blatant attack’

Just when it seemed like the dust had settled, a new war of words has exploded between two of the world’s closest allies. Tensions are boiling over…

White House photo of Trump sparks conspiracy theory

Every move, detail, and word from Donald Trump is carefully scrutinized. Recently, a new photo of Trump inside the White House caught the attention of sharp-eyed social…

Mysterious Pink Crust Appearing on Your Wall? Here’s What It Might Mean

Yeah. That’s how my Tuesday began. I walked into the kitchen, coffee still brewing, and there it was — the weird, pink foam on the wall. Pussy willow —…

My Stepmother Wore the Same Dress as Me to My Prom — She Told Dad It Was ‘Support,’ but Her Real Reason Made My Bl0*d Boil

When I came downstairs for prom in my dream dress, I found my stepmother, Carol, standing in our living room wearing the exact same outfit. She claimed…

He Held His Baby On The Plane — What Happened Next Left Everyone In Tears

Chaos erupted at the airport. Loud announcements, bewildering flight boards, children’s cries, tense looks at watches, and apprehensive footsteps on the tile floor were all part of…

Leave a Reply

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