NEW YORK, Jan 11 ― US stocks fell yesterday despite staging a comeback late in the day, as bets that the US Federal Reserve could raise interest rates as soon as March led investors to pare risky assets and lifted the 10-year Treasury yield to a two-year high.
“The big story of the first week of the new year has been the steady march higher in US treasury yields,” said Arthur Hogan, chief market strategist at National Holdings Corp. A busy week sees US inflation data due tomorrow, which analysts say could show core inflation climbing to its highest in decades at 5.4 per cent, a level that would all but confirm a US rate rise is coming in March. The season of corporate earnings also kicks off this week with the big US banks reporting from Friday onwards.
“Markets may still be underestimating how far the federal funds rate will rise in the next few years, so our forecast is for the 10-year yield to rise by around another 50bp, to 2.25 per cent, by the end of 2023.”