Rising interest rates within the bond market are signaling a change within investor sentiment that could possibly boost stocks and exchange traded funds (ETFs) in the coming months. It appears that the financial sector may be ready to rebound, and equities may start to head in the right direction.
This change in sentiment comes just in time for the Federal Reserve’s meeting today and tomorrow. The public had been awaiting another rate cut of around one-half a point. Now, the feeling that one-fourth a point cut may do, and be the last in a two-year series, explains Carl Gutierrez for Forbes.
The market may not feel that the economy is dropping so much as before, and money is beginning to flow more steadily. Friday’s global bond selloff was triggered by inflation in Japan reaching a 10-year high, in tandem with better-than-anticipated first quarter earnings reports in the United States.
As yields around the world stabilize, one analyst says that it removes the incentive for investors to take money out of the United States, leading to stabilization.
SPDR Lehman International Treasury Bond (BWX) is up 5.2% year-to-date and has a 3.83% yield. iShares Lehman 7-10 Year Treasury Bond (IEF) is up 3% year-to-date and has a 4.05% yield.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.