Investing.com – US Treasury yields potentially climbing to around 5% in the wake of Donald Trump’s presidential election victory could impact elevated equity valuations, according to analysts at JPMorgan Chase (NYSE:).
Following Trump’s win last week, the yield on the benchmark 10-year US Treasury note, which typically moves inversely to prices, rose.
Driving the increase were concerns among investors that Republican plans for sweeping tax cuts could grow the already-expending federal deficit, which may in turn cause the government to issue more bonds to pay for the debt.
Meanwhile, worries persisted that Trump’s policies could push up inflation and lead the Federal Reserve to slash interest rates at a slower pace than initially anticipated. Broader economic strength and labor market resilience have also been seen as reasons for the Fed to take a less aggressive approach to future borrowing cost reductions.
Late last week, the yield on the 10-year note retreated somewhat from its post-election jump after the Fed slashed interest rates by a quarter-point. Fed Chair Jerome Powell also told reporters that officials were monitoring the run-up in bond rates, adding “things have…
Read the full article here