As Treasury Yields Soar, Should Stock Investors Worry?
The stock market has seen quite a bit of volatility so far in 2023. Despite having rebounded convincingly from 2022's bear market, major stock market benchmarks remain below their all-time records from 2021. Many individual stocks remain far, far below their highest levels.
One culprit that many market commentators have blamed for the stock market's ups and downs is the bond market. Treasury yields have been on the rise lately, and one key metric just hit levels not seen in 16 years. With so many things happening in the bond market that are unfamiliar to newer investors, the question many are asking is whether those who prefer investing in stocks should be concerned. Here's an overview of what's going on and the level of worry it's causing across the stock market.
Interest rates in the bond market have continued to go up, and unlike what was happening this time last year, the moves higher in rates are showing up pretty much across the market. The Federal Reserve's aggressive campaign to raise short-term interest rates showed up immediately in the shorter end of the Treasury market, with yields on Treasury bills maturing in the next three to 12 months having moved above 5% a while ago. Early on, though, most bond investors thought those high rates would be short-lived, and so yields on longer-maturity bonds stayed relatively low.
Source Fool.com
