The safety and stability of bonds can punish the stock market as investors move their money to 'risk-free' assets.
for longer than previously thought. And as interest rates rise, generally so do bond yields, which move inversely to bond prices.
As investors decide where to put their money, bonds with higher yields provide an alternative for stocks, especially during times of volatility. The safety and stability of bonds can punish the stock market as investors move their money from stocks into bonds. But for many investors with an appetite for lower risk, the boosted yields can be a boon.Rising 10-year bond yields tend to be an obstacle for tech stocks.
"Rising bond yields can trigger instability and valuation concerns in the stock market, as bonds compete with stocks for investor money," said Russell Hackmann, President of Hackmann Wealth Partners. "Higher bond yields may also imply an economy that is strong, with inflation relatively high, and a Fed needing to continue to combat inflation."
and the central bank's ability to engineer a soft landing. What's more, outstanding questions remain over whether the covid era will usher in a period where higher rates are the norm, in order to keep inflation and unemployment stable over time.
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