Worried About Rising Rates, Don’t Be…For Now
A $38 billion auction of 10-year notes on Jan. 12 was a key indicator of the market. A poorly received auction could have added to the selling. Instead, it met strong demand (Wall Street Journal)
U.S. government-bond yields play a critical role in the financial markets, serving as a benchmark for interest rates across the economy. Since March, sub-1% yields have supported other assets such as stocks, lowering borrowing costs for companies and encouraging investors to take on risk in search of better returns. Many investors also use the 10-year Treasury yield in formulas to value stocks—with the future cash flows of companies worth more with lower yields than higher ones, all else being equal.