PANews October 13 news, according to FinanceBiggo, Bank of America strategist Michael Hartnett put forward a contrarian view, saying that if the Federal Reserve chooses to actively raise interest rates at its October policy meeting, it may not be a market negative, but could instead help stabilize long-term U.S. Treasury yields and provide support for risk assets. Hartnett believes that the core pressure in the current market is not short-term interest rates, but the tightening of financial conditions caused by the continued rise in U.S. long-term Treasury yields. Recently, the U.S. 10-year Treasury yield rose to 5.36% at one point, while the 30-year yield hit a new high since 2002, and the market has begun to worry about long-term yields rising further.
PANews October 13 news, according to FinanceBiggo, Bank of America strategist Michael Hartnett put forward a contrarian view, saying that if the Federal Reserve chooses to actively raise interest rates at its October policy meeting, it may not be a market negative, but could instead help stabilize long-term U.S. Treasury yields and provide support for risk assets.
Hartnett believes that the core pressure in the current market is not short-term interest rates, but the tightening of financial conditions caused by the continued rise in U.S. long-term Treasury yields. Recently, the U.S. 10-year Treasury yield rose to 5.36% at one point, while the 30-year yield hit a new high since 2002, and the market has begun to worry that long-term yields may rise further. If the Federal Reserve continues to stand pat, bond investors may demand a higher term premium, pushing long-end yields even higher; but if the Federal Reserve actively raises rates and sends a signal to curb inflation risks, it may help stabilize the bond market and reduce long-term financing pressure.
At the same time, Hartnett warned that the current resilience of the stock market may be masking funding pressure. EPFR data show that in the week ended last Wednesday, global funds flowed about $166.4 billion into cash-like assets, $33.8 billion into bonds, and only $12.4 billion into stocks, indicating that investors are increasing defensive allocations. Against the backdrop of persistently rising long-term interest rates, high-risk assets such as low-rated bonds may come under pressure first. If the Federal Reserve stabilizes the bond market through more hawkish policy, it could become an important factor supporting risk assets.