US Treasury Bond Yields Increased Sharply

US Treasury bond yields rose sharply. This rise was reflected as a sharp fall in gold.

10-year Treasury bond yields in the US increased sharply this week and hit the highest level in the last 1 year. This rise was reflected in gold prices as a sharp decline. As such, if interest rates continue to rise, the question of whether there will be decreases in the stock markets came to mind. With the expectations that the vaccination program and fiscal stimulus package will support the economic recovery, the US 10-year Treasury bond yield rose to 1.36 percent, the highest level in the last year. Even if the stock markets have not been affected by this rise, some investors think that rising bond yields may put pressure on stocks, which are relatively risky assets. US Bank Wealth Management Investment Manager Eric Freedman said, "When bond yields rise, the price of all other assets goes down slightly. That's the theory." He adds that the increase in interest rates has not risen enough to be an alternative to stocks yet. Earnings in the S&P 500 are reported to have reached almost all-time highs in the country, with the release of fourth-quarter balance sheets and companies performing 17.2 percent above expectations on average. According to the Bloomberg HT report, the increased risk appetite with an excessively loose monetary policy and financial incentives may decrease with the rise in bond yields. According to the fund managers survey conducted by the BofA Global Research Unit, the risk-taking percentages of investors have reached record levels, while cash distributions in portfolios are at the lowest level since March 2013. Stock distributions, on the other hand, remain at their highest level in the last 10 years. Citigroup strategists pointed out that a 10 percent withdrawal in stock markets would be perfectly normal, while analysts from Nomura state that stock markets could drop by 8 percent with the US 10-year Treasury bond interest rate exceeding 1.5 percent.     Source: Bloomberg HT