Latest news with #US10Y
CNBC
2 days ago
- Business
- CNBC
How Trump firing Powell could backfire and lift interest rates
President Donald Trump wants lower interest rates so badly he's pushing to remove the Federal Reserve chief. But Jerome Powell's ouster might have the opposite effect, according to Wall Street. Trump on Wednesday denied that he was planning to remove Powell from his post as central bank chairman. To be sure, he added that he doesn't "rule out anything." On top of that, The New York Times reported Trump has actually drafted a letter for Powell's dismissal. For months, Trump has called on the Fed to lower rates. He even said on Truth Social this week that the Fed should cut rates by 3 percentage points from current levels. For his part, Powell confirmed earlier this month that the central bank would have already lowered rates were it not for the Trump administration's tariff announcements . However, JPMorgan warned that Powell's removal could actually send long-term rates spiking higher. "Any reduction in the independence of the Fed would likely add upside risks to an inflation outlook that is already subject to upward pressures from tariffs and somewhat elevated inflation expectations," Michael Feroli, the bank's chief U.S. economist, wrote in a note Wednesday. "Moreover, market participants could demand greater compensation for inflation and inflation risks, thereby increasing longer-term interest rates, weighing on the outlook for economic activity, and worsening the fiscal position," he added. Both the 2-year Treasury yield and the benchmark 10-year Treasury rate have actually declined in 2025, but that could change if Trump moves ahead, especially on the long end. The short-term 2-year yield traded around 3.911% on Thursday after starting the year at 4.24%. The 10-year yield began 2025 at 4.57% and now sits at 4.459%. The 10-year is the benchmark for many consumer rates like those on auto loans. US10Y YTD mountain US 10-year yield in 2025 Deutsche Bank strategist Jim Reid agrees with JPMorgan and noted that Wednesday's moves gave investors a glimpse into what a Powell-firing would do to rates. In the roughly 60 minutes between the White House official's comments were released and Trump's denial, "the probability of Powell being ousted by the end of the year increased by around 15pp to 38%. Over this period, 10yr USTs yields climbed around 5bps, 30yr yields rose around 11bps, 2yr yields fell round 5bps and the EUR rose around 1.4% against the Dollar," Reid said. "So, if you wanted to make a very crude calculation about what the immediate impact would be if he did fire Powell, you could multiply these numbers by four to get close to 100%. So 10yr yields up another 20bps, 30yr yields up around 45bps, 2yr yields down another 20bps and maybe the dollar falling nearly 6%," he said.
CNBC
08-07-2025
- Business
- CNBC
'Big Short' Trader Steve Eisman breaks down one reason investors shouldn't worry about deficits
Steve Eisman, the investor who called the subprime mortgage crisis, said fears of the massive size of the federal budget deficit may be overblown. President Donald Trump's One Big Beautiful Bill Act signed last week added to investor concerns about the fiscal trajectory of the country and future government borrowing. The bill includes trillions of dollars in tax cuts, increased spending for immigration enforcement and large cuts to funding for Medicaid and other social programs. The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of outstanding U.S. debt over the next decade. 'The Real Eisman Playbook' podcast host and former Neuberger Berman senior portfolio manager takes solace in the 10-year Treasury yield, however, which would be expected to move in reaction to the country's worsening fiscal health. Instead, the benchmark rate has been directionless since December 2022, Eisman said. "If there was a real alternative to Treasury, then all of this stuff about the deficit is something that I would pay attention to. But as long as there's no alternative, there's nothing to talk about," Eisman said Monday on CNBC's " Fast Money ." US10Y 1Y mountain 10-year Treasury yield over the past year. Investors fear the tax-and-spending bill could put upward pressure on bond yields that already face inflationary concerns from rising tariffs. As the U.S. issues more debt to pay for the bill, increased supply could weigh on prices and raise yields. Widely-followed Eisman also isn't paying close attention to the valuation levels for stocks, which have risen significantly as the market recently climbed to record highs. "What broke the internet bubble was not valuation. What broke the internet bubble was a recession that caused some of these companies to go bankrupt and to do badly," Eisman said, referring to the late 1990s boom that came crashing down starting in 2000. "So until there's something really bad happening, like a trade war, which is still a possibility, the valuation is not something I really pay that much attention [to]."
Yahoo
23-05-2025
- Business
- Yahoo
Markets Hit a Ceiling, Says Fidelity's Timmer
Equity markets aren't priced for a slowdown, says Fidelity's Timmer, even after sharp swings. Jurrien Timmer, Fidelity's director of global macro, told CNBC that despite recent tariff-induced volatilitywhere the S&P 500 plunged 21.5% then rebounded 23%markets have established boundaries beyond which declines have been rolled back. He sees 2025 delivering moderate earnings growth offset by value pressures coming mostly from the interest rate side, with the 10-year Treasury (US10Y) yield at 4.5% competing directly with equity yields around 4.55%. Chicago Fed President Austan Goolsbee warned that tariff hikes could spur a stagflationary impact, hurting output and lifting pricesthe central bank's worst situation. Timmer noted tariffs act like a tax, paid either by companies via thinner margins or by consumers through higher costs. He added that both earnings and GDP estimates have been marked down, though not significantly worse than typical intra-year adjustments. Timmer argues the market now faces a ceiling: It's either rates driving down valuations or earnings driving down estimates from tariffs. He highlighted the tug-of-war between bond yieldsUS2Y, and equity benchmarks like The Dow Jones Index, complicating the outlook. Why It Matters: With fiscal and trade risks capping both valuations and earnings, investors must balance duration and equity exposure. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
Markets Hit a Ceiling, Says Fidelity's Timmer
Equity markets aren't priced for a slowdown, says Fidelity's Timmer, even after sharp swings. Jurrien Timmer, Fidelity's director of global macro, told CNBC that despite recent tariff-induced volatilitywhere the S&P 500 plunged 21.5% then rebounded 23%markets have established boundaries beyond which declines have been rolled back. He sees 2025 delivering moderate earnings growth offset by value pressures coming mostly from the interest rate side, with the 10-year Treasury (US10Y) yield at 4.5% competing directly with equity yields around 4.55%. Chicago Fed President Austan Goolsbee warned that tariff hikes could spur a stagflationary impact, hurting output and lifting pricesthe central bank's worst situation. Timmer noted tariffs act like a tax, paid either by companies via thinner margins or by consumers through higher costs. He added that both earnings and GDP estimates have been marked down, though not significantly worse than typical intra-year adjustments. Timmer argues the market now faces a ceiling: It's either rates driving down valuations or earnings driving down estimates from tariffs. He highlighted the tug-of-war between bond yieldsUS2Y, and equity benchmarks like The Dow Jones Index, complicating the outlook. Why It Matters: With fiscal and trade risks capping both valuations and earnings, investors must balance duration and equity exposure. This article first appeared on GuruFocus.
CNBC
16-05-2025
- Business
- CNBC
The bond market is running the show again. The key level to watch
It's the bond market's world, and equity investors just live in it. The 10-year Treasury note yield staged a big reversal this week, giving a boost to stocks. The benchmark rate spiked higher to start the week after the U.S. and China agreed to lower tariffs for 90 days. Midway through the week, though, some trepidation entered investor sentiment, as the 10-year hovered around the key 4.5% level. But the rate quickly fell back below that level on Thursday — helping the S & P 500 post a four-day winning streak. The yield fell again on Friday to around 4.39%. US10Y 1M bar 10-year U.S. yield in past month Investors going forward should keep an eye on the 10-year, especially if it tries to break back above 4.5%. "S & P 500 daily returns have started to meaningfully weaken when the 10-year Treasury yield has increased above 4.5% since 2021 (in this rate cycle)," wrote Tavis McCourt, institutional equity strategist at Raymond James. He pointed out that the S & P 500's annualized returns have dropped to just 1% when the 10-year yield trades above 4.5%. That's compared to 10.4% with a yield below 4.4%. When the 10-year yield trades under 4.3%, the S & P 500 averages a return of 19.6%. Returns for mid- and small-cap stocks are even worse when the 10-year yield tops 4.5%. On an annualized basis, the S & P Midcap 400 loses 16.6% on average under such high yields, while the S & P Small Cap 600 loses 18.4%, McCourt pointed out. Elsewhere Friday morning on Wall Street, Loop Capital raised its price target on Meta Platforms to $888 from $695, implying more than 30% upside. "While our pre-quarter checks had pointed to resilience, our expectation that a drop in spending intensity from China-based advertisers would flatten revenue growth was a misread," analyst Rob Sanderson wrote in a Thursday note. "This large spending cohort has backed off (with some geographic reallocation) but AI-driven performance gains across the platform are more than an offset."
