Stock markets have had a rough run this week as fears of inflation and high Treasury yields linger.
There's no two ways about where the Federal Reserve stands on its battle against rising prices as Chair Jerome Powell firmly backed the central bank's 2% target, adding that he doesn't think rates are too high now.Recent data has shown that while U.S. inflation remains well above the target rate, the pace of monthly increases has decelerated, but evidently not fast enough by Fed standards.
To top it all off, the yield on the 10-year Treasury bond notched above 5% as it rose for the fourth day in a row, pressuring equity markets further. High bond yields pressure equity markets because stocks are traditionally looked at as riskier assets that can sometimes provide higher returns, while bonds stand to provide a steady, less-risky source of regular income.
These high interest rates have also pressured some of the largest and most profitable banks in the United States as big Wall Street lenders have"Banks are cutting costs where they can because things are really uncertain next year," Chris Marinac, research director at Janney Montgomery Scott, said. "They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad.
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