All eyes are on the US 10-year yield. Will the peak hold?
Last month on May 9th, the US 10-year yield peaked at 3.21%. This weakness in the bond market then backed off over the next few weeks, but today began nosing higher. With all the debt in our economy, higher rates slow growth as interest expense and cost of capital rise.
The markets are wrestling with a conundrum: will interest rates of 3% slow economic growth enough to tame inflation or is the Fed's unwillingness to raise rates anywhere close to our 8% inflation feeding the inflation monster?
It is too early to tell.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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