30-Year Treasury Yields Hit 19-Year High of 5.35%, Pressuring Bonds and Stocks

โดย The Motley Fool·US·Read original
Summary · why it matters

Interest yields on super-safe 30-year Treasuries have climbed to a nineteen-year high of 5.35%, a move that is weighing on bond prices and rippling into the stock market. The average 30-year Treasury has lost about 5% of its market value over just the past year, and corporate and municipal bonds are losing value too as current owners sell and interest in newly issued debt stays tepid. Following last week's decision to raise the baseline rate, the market is betting on at least one more, and maybe even two more, quarter-point increases in the Fed Funds Rate this year, a backdrop that led brokerage firm Charles Schwab to warn that now is not the time to favor long-duration bond investments. With long-term Treasury yields now markedly higher than most income-producing stocks' dividend yields, investors have good reason to rotate out of dividend-paying stocks and into bonds, crimping demand for those equities. On the consumer side, 90-day credit card delinquencies among U.S. borrowers reached a 15-year high at the end of last year and have stayed near those levels, while the average payment on a new car stands at $765 per month and $542 per month for a used vehicle, according to credit bureau Experian.

Impact on assets 7

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Charles Schwab Corp
SCHW
▼ NegativeMonetaryrelevance

Rising long-term Treasury yields and expected further Fed rate hikes make Schwab's long-duration bond investments unattractive, prompting its warning against them.

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Effective Federal Funds Rate
EFFR
▲ PositiveMonetaryrelevance

Market bets on at least one or two more quarter-point Fed Funds Rate hikes this year after last week's baseline rate increase.