barrons.com/amp/articles/stock-market-fed-rate-increase-51637790713
Fixed-income markets are signaling that the Federal Reserve will have to increase interest rates sooner than expected. The yield on the 2-year Treasury note has gone from 0.5% in early November to 0.64% as of Wednesday. Investors expect the Fed to raise interest rates to combat inflation.

Investors expect the Fed to raise interest rates to combat inflation. Minutes from the Fed’s meeting earlier this month show that members of the central bank are prepared to increase rates sooner than previously anticipated. That belief is beginning to creep into credit spreads between corporate and government debt.

Investors have fled corporate bonds in anticipation of rate increases that could slow economic growth and pressure profits. Ten-year bonds issues by manufacturing companies in the S&P 500 yield 1.08 percentage points more than the 10-year Treasury note, according to FactSet.

The spread for corporate bonds in the energy sector has risen to 1.41 percentage points from a November low of 1.2. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average are down 0.1%, 1.3%, and 1.7% from their highs.
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