Thursday, Jun 07, 2007
UGLY UGLY
FT.com: Bond yields see biggest jump in years
Some analysts suggested the dramatic rise in yields could herald a sustained period of higher interest rates, increasing the cost of borrowing for companies, deflating borrower-friendly credit markets and eventually crimping the outlook for equity markets.
“Stocks need to reflect what bond yields are saying,” said Michael Kastner, portfolio manager at SterlingStamos. “Rate cuts have been taken away and if yields start to reflect that rate hikes are likely this year, then it will get pretty ugly for stocks.”
Posted by chris @ 10:33 PM (128 views) Add Comment
1 Comment
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1. paul said...
Bonds are simply loans based on secured income - they set the market rate for credit to all manner of riskier ventures.
If their prices are going up, it means that the market appetite for risk is receeding and becoming more expensive. This means that credit can no longer be extended cheaply, because the price of the underlying loan has gone up.
Ugly indeed.