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Market Extra: Why stocks and bond yields aren’t moving in tandem

Expectations for a hike in interest rates spelled trouble for both stocks and bonds on Friday, no doubt adding to investor jitters over the prospect that supposedly diversified portfolios could suffer a double whammy.

Jangled nerves are justifiable given the breakdown in the traditional relationship between bond yields and stocks. Typically, stocks and bond yields move up and down together on the idea that good news for equities is bad news for bonds—pushing down prices and lifting yields—and vice versa.

Treasury yields jumped Friday and extended their rise Monday as bond prices fell on concerns the Federal Reserve might aim to raise rates more aggressively than previously thought.

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