New York CNN store —
More bad news for those looking to buy a home: the benchmark 10-year Treasury yield rose to about 4.22% Thursday afternoon, its highest since June 2008. Mortgage rates, now hovering just under 7%, tend to move in step with the 10-year yield.
Many market analysts believe yields will rise even higher in the near term on mounting expectations that the US Federal Reserve will hike interest rates by three-quarters of a percentage point at its November and December meetings. Still, investors brushed off fears of higher interest rates — at least in the morning.
Why? merits.
Strong corporate earnings from Dow (DOW) components IBM (IBM), chemicals giant Dow (DOW) (yes, Dow (DOW) is in the Dow (DOW)) and telecoms leader AT&T (T) helped boost Wall Street sentiment to lift. The Dow (DOW) was up in early trade but was down about 140 points, or 0.5%, at midday. The S&P 500 and Nasdaq each lost about 1%.
All three indices are still up for the month of October after falling in August and September.
It’s possible that investors are finally coming to terms with the fact that inflation isn’t going away anytime soon and that the Fed will have to act aggressively to keep fighting it.
Strong payrolls (first jobless claims fell this week) give the Fed cover to raise rates further without worrying too much about how rate hikes might slow the economy just yet.