Reported 14 days ago
The recent increase in interest rates has raised concerns for the stock market, coinciding with a wave of optimism following Donald Trump's election victory. While the stock market initially reacted positively, the unexpected rise in the 10-year treasury yield, which jumped from 3.74% to 4.47%, suggests a shift towards potentially more lucrative bonds. This change, driven by rising inflation expectations and increases in real yields, poses a threat to stock valuations, as high PE ratios might lose their appeal in a financial landscape where bonds become more competitive. As uncertainty looms over profit growth and budget deficits under Trump's policies, the balance between stocks and bonds may be shifting dramatically.
Source: YAHOO