News Digest: Fed rate hikes turn the spotlights on bond yields
September 13, 2022
Fears of more interest rate hikes by the Federal Reserve is pushing investors towards the bond market amidst the expectations of a spike in their yields. This could potentially result in the equity and fixed income markets taking a further blow in the upcoming weeks, says a report.
The two-year US Treasury yield, considered the bellwether for interest rate movements, is hovering around 3.79%. These levels are close to the peaks of November 2007 and could be seen as a response to the expectations of how the Fed rates could move during the rest of 2022 as the US Treasury attempts to tame inflation.
Some fund managers believe that the upward move would continue and the bellwether yields could top 4% to record levels over the past 15 years. Rising bond yields have added pressure to the equity market in 2022, especially the growth and technology stocks that see a real threat of eroding future earnings potential and spiking up cost of capital.