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The Bank of Japan’s “yield curve control policy” could be on its way out as central banks around the world raise rates to beat inflation.
Both government and corporate bond yields have been climbing. For many companies, though, higher revenue more than covers the cost.
The yield on the 10-year Treasury briefly hit 5%, the highest level since 2007. A resilient economy and expanding debt are pushing rates up.
If the Federal Reserve needs to keep interest rates higher to continue battling inflation, 10-year yields will have to compete.
Bond investors are demanding higher corporate bond yields. That’s a good sign about where the economy’s headed this year.
The government needs to plow out of a lot of debt from previous COVID-19 rescue packages and the potential $1.9 trillion in additional aid.
Interest rates on 30-year mortgages have started climbing.
Rising bond yields are an optimistic sign, even though the Fed says a real recovery isn’t right around the corner.
But that may not be signaling that the economic damage from the coronavirus will be as bad as the Great Recession.
When you factor inflation, investors are actually losing money by lending to the U.S. government.