{"id":75114,"date":"2023-10-21T02:15:43","date_gmt":"2023-10-21T06:15:43","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/5-bond-yields-make-you-scared-count-to-10-and-adjust\/"},"modified":"2023-10-21T02:15:47","modified_gmt":"2023-10-21T06:15:47","slug":"5-bond-yields-make-you-scared-count-to-10-and-adjust","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=75114","title":{"rendered":"5% Bond Yields Make You Scared? Count to 10 and Adjust."},"content":{"rendered":"
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The stock market has been preoccupied with the number five of late, and not for reasons that typically make it a subject of fascination. Five plays a key role in many of the world\u2019s religions, while for math nerds, it isn\u2019t just the third prime number but also the first of the so-called \u201csexy primes\u201d\u2014separated from 11, another prime, by six. In numerology, five is linked with \u201cchange, evolution, love, and abundance.\u201d <\/p>\n

\n

But it\u2019s the 10-year Treasury yield and its approach to 5%\u2014a level last seen in 2007\u2014that has investors concerned, worried enough to send stocks lower this past week. The
\n S&P 500 index
\n fell 2.4% on the week, while the
\n Dow Jones Industrial Average
\n lost 1.6%, and the
\n Nasdaq Composite
\n dropped 3.2%. No love and abundance there.<\/p>\n

All of the tumult is understandable. After all, the Federal Reserve has moved the federal-funds rate up by 5.25 percentage points since March 2022, at the fastest clip in more than 40 years, while the 10-year yield has surged 1.64 percentage points from its lowest point of the past six months. But investors may be getting themselves worked up over nothing.<\/p>\n

\u201cIt\u2019s not 5% that matters to stocks,\u201d says Michael Antonelli, managing director and market strategist at Baird. The issue is how quickly we\u2019ve gotten there. Yet even with the turmoil in the Middle East, the stock market may be able to avoid a larger decline, as long as the economy holds up. So far, so good. <\/p>\n

The job market is still strong\u2014first-time unemployment claims came in below 200,000 in the most recent report\u2014while economists expect third-quarter U.S. gross-domestic-product growth to come in at 3.3% when it is released on Thursday. The Atlanta Fed\u2019s GDPNow model puts it at 5.4%. <\/p>\n

While it would be a mistake to dismiss the macroeconomic and geopolitical concerns now weighing on markets, overestimating their significance could also be detrimental to an investment portfolio. Antonelli favors energy stocks, which have been getting a boost with oil trading above $90 a barrel. The
\n Energy Select Sector SPDR
\n exchange-traded fund (ticker: XLE) has been trading sideways this year but offers safe dividends. \u201cHigh quality\u201d consumer-discretionary stocks also look good and will benefit as long as the economy stays strong, he says. Retail sales rose 0.7% in September, and
\n American Express
\n (AXP) posted yet another quarter of record revenue and profit as America\u2019s propensity to shop continued, even if its stock fell 5.4% on Friday following the release.<\/p>\n

The stock market just needs time to adjust to higher bond yields and the possibility that they will stay high for longer. That should be the base case following remarks from Fed Chairman Jerome Powell on Thursday at the Economic Club of New York, which suggest that the Fed will hold rates steady and let higher bond yields do their work.<\/p>\n

The number five might be scary, but we recommend that investors take a deep breath and count to 10. This, too, shall pass. <\/p>\n

Write to <\/strong>Carleton English at carleton.english@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The stock market has been preoccupied with the number five of late, and not for reasons that typically make it a subject of fascination. Five plays a key role in many of the world\u2019s religions, while for math nerds, it isn\u2019t just the third prime number but also the first of the so-called \u201csexy primes\u201d\u2014separated […]<\/p>\n","protected":false},"author":1,"featured_media":75115,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-75114","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\n5% Bond Yields Make You Scared? 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