Wall Street was watching as President Joe Biden said Wednesday that he is confident that the White House and congressional leaders would reach a deal on the debt ceiling.
One worry is that once a resolution is reached, the government could start to issue new debt, which might push Treasury yields higher, and in turn weigh on stocks. Heading into first-quarter earnings, he said Wall Street analysts cut estimates for second-quarter earnings by 7% to roughly $53.14 per share from $57.16.
Real yields continued to drop in 2012 as the Fed continued expanding its holdings of Treasurys and other government-backed bonds. That isn’t expected to be the case in 2023 as the Fed squarely has tamping down inflation in focus, with a specific goal of getting it down to its 2% annual target.Recently, both inflation expectations and real yields have been declining from their 2022 highs in April of that year, and October of the same year, respectively, Colas noted.