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As Bond Yields Rise, Stocks Remain Buoyant, for Now

As Bond Yields Rise, Stocks Remain Buoyant, for Now A jump in long-term interest rates may lead investors to question how much control the Federal Reserve has over the economy and markets. Credit.Glenn Harvey April 9, 2021, 10:00 a.m. ET The sharp rise in bond yields is forcing traders to consider that they may be holding two irreconcilable ideas in their heads. One is that the Federal Reserve has no real control over bond market interest rates. The other is that the Fed can keep the stock market aloft as long as it tries to control interest rates. The resilience of share prices the S&P 500 rose 5.8 percent in the first quarter suggests that those two ideas can coexist. But if yields continue to rise, the impact on companies, consumers and homeowners and the appeal that fatter bond yields may have to investors could produce a reckoning for stocks.

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