Last week, we saw a massive broader
market sell-off that, in part, appeared to be a reaction to stronger
economic activity. This included 4% GDP growth in the second quarter and
strong labor market data. These reports added to concerns that the
Federal Reserve will allow interest rates to rise sooner than expected.
As economic activity picks up, the danger of inflation also rises --
and the Fed's primary weapon against inflation is higher interest rates.
After a period of near-zero rates, an uptick in Treasury yields could
cause a significant shock to the system and trigger a flight out of
equities and into higher-yielding fixed-income products. (more)
Please share this article
No comments:
Post a Comment