Stock Market logoStock Market Station

All the stock market news, every minute updated!

06 August 2021
05:52 hour

Inflation, yields, and the stock market

Reddit Stocks

07/03/2021 - 12:24

The market is freaking out because it's afraid that higher inflation means the Fed will raise interest rates, which will hurt companies - especially growth companies - by imposing more expensive long term financing. Also bonds with higher yields are more attractive, so some people reallocate money towards those. Thus stock prices drop. But what I don't get it, if you're truly afraid that higher inflation is coming, wouldn't you want to hold assets more than cash or bonds? The rout in some sectors seems irrationally savage. Green energy stocks are down 50% or more, even though most valuations are well under $10 billion, and we all know there are trillions of dollars in global, not just US, spending happening over the next decade to transition the world's energy system. It just seems to make no sense to me; even if I were convinced that inflation is going to be at 4-5% for the next few years, shouldn't that just mean that all these companies will be gradually increasing their prices and that their market caps will adjust upwards to reflect the constant of their inherent value in the face of a declining nominal value of the dollar? Or to take it yet another step further, the companies with global exposure and global sales should actually be primed to do even better, since their sales in Euros etc. will actually be worth relatively more when they convert those earnings to dollars?   submitted by   /u/shnozzletop [link]   [comments]


READ THE FULL ARTICLE ON REDDIT STOCKS

Related headlines:

  1. Why do bond yields rising matter? (26/02/2021 - Reddit Stock Market)
    Why does bond yield rising matter? I’ve read that it’s because of expectations of inflation and the increase of interest rates to combat said inflation. Higher interest rates hurting the stock market makes sense. Bond yields going up in anticipation of inflation makes sense as people don’t want to to buy bonds when there is high inflation, which increases yield prices But does bond yield prices DIRECTLY affect the stock market? Or is it just that as expectations of inflation increase, bond yields go up and the stock market is also hurt, tho not by bond yields going up. So is the real problem the expectations of inflation and ensuing increase of interest rates and not the bond yields going up?   submitted by   /u/Django_lover [link]   [comments]
    [visit article]
  2. 10 year treasury yield and inflation, what else holind the market back? (16/04/2021 - Reddit Stocks)
    In last February, the market crushed (we can argue about market correction or whatever you call it) because of two things, the 10 year treasury yield and inflation were rising. In last few weeks, the 10-year yields have been decliing and today it hit 1.57. On the others hand, we haven't seen any notable evidence of inflation becoming a wild big issue. I wonder what else is holinding the growth stock back?   submitted by   /u/MangoExternal [link]   [comments]
    [visit article]
  3. Global fund managers warn of stock market correction if yields surge to 2%; covid-19 risk no more (22/03/2021 - Financial Express)
    Currently, the 10-year Treasury yield is sitting near 1.6%, down after having breached 1.7% last week. Yields have moved higher as inflation worries mount and global economic recovery takes shape.
    [visit article]
  4. NASDAQ is far from correction. Prepare for treasury yields huge rise. (12/05/2021 - Reddit Stocks)
    We all were hoping to have less than 2% inflation this year. But 4.2% HAPPENED IN APRIL. WAY TOO HIGH!!! High inflation will means that treasury yields will rise itself much higher. And probably FED is forced to rise interest rates to stop too high inflation or else everyone loses their money. What higher treasury yields and interest rate means? It means that tech stock become less value. And yes, tech stock will drop much more than it was on 8 may aka before NASDAQ correction. And i don't think we see recovery anytime soon.   submitted by   /u/MAARJA007 [link]   [comments]
    [visit article]
  5. Bond Report: Treasury yields fall Friday, end lower for week and month despite inflation worries (29/05/2021 - Market Watch)
    Yields for U.S. government debt edged lower Friday, as investors pored over another reading of inflation, affirming that price pressures are gathering, though market participants view them as transitory.
    [visit article]
  6. Market Snapshot: Dow futures drop 450 points as Treasury yields continue to fall (08/07/2021 - Market Watch)
    Stock-index futures point to a sharply lower start Thursday as yields on government bonds extend their decline as investors shy away from bets on a blistering economic recovery and rising inflation.
    [visit article]
  7. NewsWatch: Can the bull market in stocks survive rising inflation, bond yields? Here’s what history says (22/02/2021 - Market Watch)
    Rising bond yields are sending shivers through the stock market. Here's a sector-by-sector breakdown of what history says about a rising rate environment.
    [visit article]
  8. What does falling bond yields mean for a market correction? (20/07/2021 - Reddit Stocks)
    Hi there. I had a couple thought about bond yields, and was hoping someone could confirm/correct me on this thinking. Bond yields are falling, and have been steadily falling for years. Accelerated decline in yields demonstrates increased demand. People with a brain of their own (as opposed to brain from financial press) know inflation is coming. Bonds do poorly compared to stocks in inflationary periods because their payouts are locked for the buyer based on the price/yield when they buy. Stocks tend to do better in inflationary periods because they maintain their purchase (selling) power. Conclusion: Smart big money investors are fleeing to bonds to hedge against a market correction/collapse, that they expect to come before inflation really starts kicking us in the ass. With inflation coming quickly, the correction should be expected in the very short term. Thoughts?   submitted by   /u/sometimesikillplants [link]   [comments]
    [visit article]
  9. Market Extra: Is inflation eating up all the interest you’re earning on 10-year Treasury notes? (11/06/2021 - Market Watch)
    Short positioning may be masking some concerns by investors in the bond market about inflation, as yields dip even as cost of living in America keeps rising.
    [visit article]
  10. Market Extra: Is inflation eating up all the interest you’re earning on 10-year Treasury notes? (11/06/2021 - Market Watch)
    Short positioning may be masking some concerns by investors in the bond market about inflation, as yields dip even as cost of living in America keeps rising.
    [visit article]
  11. Keeping yields low when inflation is rising is risky (24/02/2021 - Financial Express)
    RBI risks losing credibility if it tries to keep bond yields low while, to contain inflation, it will be tightening policy
    [visit article]
  12. Market Extra: Bond King Jeff Gundlach says there is a simple reason Treasury yields are so low even as inflation surges (15/07/2021 - Market Watch)
    Bond guru Jeffrey Gundlach of DoubleLine Capital said it is no mystery why U.S. Treasury yields are anchored lower despite evidence that inflation is rising in an economy attempting to rebound from a stultifying pandemic.
    [visit article]
  13. Market Extra: U.S. Treasury yields fall despite higher inflation: Here are some reasons why. (10/06/2021 - Market Watch)
    Inflation and bonds don't mix. So it is curious that a surge in the rate of inflation in 2021, accelerating at its fastest pace since the 2008 financial crisis, is being met with bond buying rather than selling on Wall Street.
    [visit article]
  14. Market Extra: Is this ‘good’ inflation or ‘bad’ inflation? Stock-market investors are rattled because they can’t tell (14/05/2021 - Market Watch)
    The stock market is generally expected to benefit from inflation, but surging price pressures are rattling investors.
    [visit article]
  15. Market Extra: Is this ‘good’ inflation or ‘bad’ inflation? Stock-market investors are rattled because they can’t tell (14/05/2021 - Market Watch)
    The stock market is generally expected to benefit from inflation, but surging price pressures are rattling investors.
    [visit article]
  16. Bond yield relationship to stock price in current market (01/03/2021 - Reddit Stocks)
    I am a bit confused about what is going on in the markets right now. To my understanding, rapid increases in Treasury yields have prompted equities selloffs. However, bond yields only go up when prices go down, correct? And prices go down when people are selling bonds faster than they are buying them. It seems to me that the only reason for a selloff would be optimism in the future economy and rising inflation expectations. But if people are optimistic and selling bonds, why are equity prices decreasing? Surely the same people who sold the bonds and are optimistic would put money into equity markets, leading to higher prices? I understand that higher bond yields lead other investors to think about moving capital there, but how can bond yields go up and stock prices go down at the same time? Wouldn't the demand for bonds quickly cap the rise in yields (and lead to yields falling again)?   submitted by   /u/SaitosElephant [link]   [comments]
    [visit article]
  17. Bond Report: Treasury yields hold steady with Fed meeting set to kick off (15/06/2021 - Market Watch)
    Treasury yields were seeing subdued trading on Tuesday, as fixed-income investors awaited a fresh round of data on retail sales and inflation and the start of the Federal Open Market Committee's two-day policy meeting, which could provide the clearest picture of the central bank's view on the economy and inflation outlook.
    [visit article]
  18. The Tell: 3 reasons why the stock market might be able to survive rising bond yields in 2021 (23/02/2021 - Market Watch)
    Rising Treasury yields are contributing to a selloff by the stock market's pandemic highfliers, but probably won't be enough to spoil the appeal of stocks over bonds, one analyst says.
    [visit article]
  19. The Tell: 3 reasons why the stock market might be able to survive rising bond yields in 2021 (23/02/2021 - Market Watch)
    Rising Treasury yields are contributing to a selloff by the stock market's pandemic highfliers, but probably won't be enough to spoil the appeal of stocks over bonds, one analyst says.
    [visit article]
  20. Market Snapshot: Dow futures edge higher as investors await inflation data (10/03/2021 - Market Watch)
    Stock-index futures trade mixed Wednesday as investors keep an eye on bond yields and await inflation data that might show whether consumer prices are beginning to rise.
    [visit article]
  21. Market Extra: 3 reasons the rise in bond yields is gaining steam and rattling the stock market (25/02/2021 - Market Watch)
    Inflation fears, an inactive Federal Reserve and forced selling are cited as some of the forces accelerating the bond yield surge this week.
    [visit article]
  22. NewsWatch: Why the stock market’s big rotation can continue even if bond yields stop rising (02/03/2021 - Market Watch)
    Rising bond yields get credit for fueling a rotation away from the U.S. stock market's pandemic winners toward shares of companies more sensitive to the economic cycle. In reality, there's a lot more to it, says one market economist.
    [visit article]
  23. The Tell: Why the stock market’s big rotation can continue even if bond yields stop rising (02/03/2021 - Market Watch)
    Rising bond yields get credit for fueling a rotation away from the U.S. stock market's pandemic winners toward shares of companies more sensitive to the economic cycle. In reality, there's a lot more to it, says one market economist.
    [visit article]
  24. Is the stock market still recovering rn? (15/06/2021 - Reddit Stock Market)
    I can’t tell if the stock market is still trying to recover from the inflation scares in May rn in June or if it’s still trying to move pass the rise in inflation rates and all that? What do you think Is happen in the stock market and what is having a direct impact on it ? When do you guys think we will start seeing bigger daily returns on etfs index funds and mutual funds ? Bc I keep watching the market daily when I can and I’m just seeing it rise and fall and stay at a stagnant pace and not really rising or dipping hard like it was rising early 2021 real crazy or when it hit hard in 2020 when Covid hit? What are we in for on the stock markets future and the feds inflation rate predictions when they meet tomorrow ? And will what they say ease the fear on the stock market ? Do you think In your own opinion that the stock market and the Economy will recover in the short term towards the end of the year and gain more towards the end of the year ?   submitted by   /u/at235 [link]   [comments]
    [visit article]
  25. : Don’t be fooled — inflation is a big risk for stock market investors. Here’s how to prepare (11/06/2021 - Market Watch)
    Michael Brush advises on how you can avoid making mistakes as bond yields rise and the central bank reduces its stimulus.
    [visit article]
  26. Market Extra: Has Powell lost control of yields or is latest surge part of the Fed’s playbook? (24/02/2021 - Market Watch)
    Is the Federal Reserve losing control of bond yields, which have lately been rattling investors' nerves, or are rising rates and inflation expectations playing out just as planned?
    [visit article]
  27. Any thoughts on the current shape of the market? (23/02/2021 - Reddit Stocks)
    Pre-market is a bloodbath. Yields going higher. Market rotating. Inflation I'm thinking about exiting most of my positions as I don't think this is over. I'm still breakeven and I want to have some cash for a beat down market. How are you playing this? Adding more or just letting it play out.   submitted by   /u/Sablac [link]   [comments]
    [visit article]
  28. NewsWatch: Don’t be fooled — inflation is a big risk for stock market investors. Here’s how to prepare (12/06/2021 - Market Watch)
    Michael Brush advises on how you can avoid making mistakes as bond yields rise and the central bank reduces its stimulus.
    [visit article]
  29. NewsWatch: Don’t be fooled — inflation is a big risk for stock market investors. Here’s how to prepare (13/06/2021 - Market Watch)
    Michael Brush advises on how you can avoid making mistakes as bond yields rise and the central bank reduces its stimulus.
    [visit article]
  30. NewsWatch: Don’t be fooled — inflation is a big risk for stock market investors. Here’s how to prepare (13/06/2021 - Market Watch)
    Michael Brush advises on how you can avoid making mistakes as bond yields rise and the central bank reduces its stimulus.
    [visit article]
  31. ‘No need to worry about inflation & yields as long as growth rising’ (24/03/2021 - Financial Express)
    There is a fair amount of euphoria in the IPO market today. This usually happens in the first phase of the bull market.
    [visit article]
  32. What bond yields tell us about the state of the economy. (16/04/2021 - Reddit Stocks)
    [Disclaimer: I'm new to this but do have a small background in economics. I posted this as a comment to another user in the daily thread, but since I put some effort into it and think it's a valuable write-up, I decided to make a thread. If anything is off, please go ahead and correct me. I do believe that the bulk of what I'm saying is accurate.] ​ My understanding is that rates (bond yields) go up when the economy is in good shape. That's because people are more confident in equities and they sell off bonds (less demand = lower prices = higher yields). When the economy is in bad shape, people go back to bonds because they're a safer alternative to stocks. People don't trust in the stock market's ability to perform and flock to bonds to give them fixed income and a safer place to park their capital. More demand for bonds = higher bond prices = lower yields. Short answer for why bond yields and prices are inversely correlated: say you have a bond that's worth $1000 face value and has a 2% yield. If demand for bonds has gone down and you must now sell that bond on the secondary market for, say, $800, then the yield has increased. Why? Because the buyer is paying less money for the same fixed return. Less money for the same fixed return = higher overall yield. And vice versa. I encourage everyone to look this up if you're not clear on it. Apart from that, right now is a weird time. Bond rates went up recently, and people were saying that was a bad sign for the markets. That's because people were saying it was related to inflation. Imagine: if inflation is going up, bonds with their current 1-2% yields (and negative real yields) are a horrible place to park your cash. You're actually losing money already due to negative real yields, but if inflation spikes 1-3% you're actually losing even more. Remember, bond yields are fixed so inflation eats into their nominal (fixed) yields. The theory was that economic stimulus plus dovish Fed policy (low interest rates, easy money) made people fearful that inflation was just around the corner. Thus, they began to sell off their bonds. Remember, less demand for bonds = lower prices = higher yields. If this were indeed the motivation for the bond sell-off, it's actually a negative indicator for the economy. It means we expect inflation to come. It means the Fed will be forced to raise interest rates to contain inflation (more expensive to borrow money). It means that future earnings will be worth less (value of dollars in the future goes down). This is why tech stocks sank at the same time bond yields went up: A. because they depend on easy capital (low interest rates) to expand their operations, and B. their valuation at the moment is highly linked to their future earnings. However, Jay Powell and the Fed came out and said any inflation would just be transitory, and the market seemed to believe it. The bond sell-off was contained. Furthermore, analysts were saying, like I said in the first half of my post, that rising bond yields is actually positive for the economy. So basically the fears about inflation got buried and we're back to a "normal" scenario where rising bond yields are seen as a positive sign for the markets. I'm not sure why bond yields went down today, but a quick Google search said that higher yields have attracted some investors (including overseas investors) back in. I'm new to this but it was good for me to make sure I understand it and try to explain it. Anyone who reads this can feel free to correct anything that is wrong.   submitted by   /u/shortyafter [link]   [comments]
    [visit article]
  33. Market Extra: What does inflation mean for the stock market? Its supposed to be a positive—but investors are spooked now (12/05/2021 - Market Watch)
    Inflation is supposed to be a positive for the stock market, but signs of growing price pressures are rattling equities across sectors this week. Here's why.
    [visit article]
  34. The Tell: Why is the stock market down? Falling bond yields point to ‘growth scare’ (08/07/2021 - Market Watch)
    Investors appear to swap fears of surging U.S. inflation for worries about stalling growth. That makes sense, but don't take it too far, says one Wall Street veteran.
    [visit article]
  35. Market Snapshot: Stock futures bounce as bond yields pull back (19/03/2021 - Market Watch)
    Stock-index futures edge higher Friday, signaling the market would attempt to bounce a day after a sharp rise in bond yields was blamed for sending equities, particularly tech shares, to losses.
    [visit article]
  36. Bond Report: Treasury yields edge lower as Wall Street fixates on Fed and inflation outlook (16/06/2021 - Market Watch)
    U.S. government bond yields are edging lower Wednesday morning ahead of the conclusion of the Federal Reserve's policy meeting which could help to set the tone for inflation expectations for fixed-income investors.
    [visit article]
  37. Bond Report: Treasury yields edge lower as Wall Street fixates on Fed and inflation outlook (16/06/2021 - Market Watch)
    U.S. government bond yields are edging lower Wednesday morning ahead of the conclusion of the Federal Reserve's policy meeting which could help to set the tone for inflation expectations for fixed-income investors.
    [visit article]
  38. Bond Report: Treasury yields slip ahead of Fed’s preferred inflation measure (30/07/2021 - Market Watch)
    Treasurys were being bought Friday, pulling yields down, ahead of publication of a measure of the Federal Reserve's preferred inflation gauge for June.
    [visit article]
  39. Bond Report: U.S. Treasury yields hold ground even as inflation picks up (30/04/2021 - Market Watch)
    U.S. Treasury yields hold their ground on early Friday's trade as investors look past consumption and inflation data that confirmed the U.S. economy's strength last month.
    [visit article]
  40. Inflation and the S&P 500, which way is up? (07/03/2021 - Reddit Stocks)
    Historically stocks have been considered a partial hedge against inflation. So with inflation on the horizon I thought it would be interesting to discuss the effects of inflation on the price of the S&P 500. Can we actually expect to see inflation rise? The argument for inflation is pretty straight forward. Over the last few months we have seen an increase in government stimulus, with another $1.9 trillion added today. Meanwhile the pandemic has decreased spending. With the end to the pandemic coming into view this means that we could be looking at a near future where a population newly flush with cash all run out to buy things they have been putting off buying. In this scenario demand outpaces supply driving demand-pull inflation. This sentiment has been endorsed by the fed who generally believed to be a good sign for the economy. So it does seem likely that we will see an increase in inflation. Though it's just a prediction, and we all know how those usually turn out. What effect will rising inflation have on the price of the S&P 500? With rising inflation, buying power decreases. This means companies pay more to produce goods while consumer purchasing decreases due to lost buying power. Meanwhile bond yields tend to increase pulling money away from stocks. On the surface this seems like an open and shut case for inflation driving lower market returns. So then why are stocks traditionally considered a hedge against inflation? The usual answer for this seems to be that companies balance sheets typically increase in proportion to inflation. Moreover the whole driving force for demand-pull inflation is increased demand resulting in companies raising prices and ultimately resulting in increased profits. So inflation is good for stock prices then? Didn't we all just agree it's bad? The truth, like so many things in the market, seems to be that the effect of inflation on the market is inconsistent and depends on a great many more factors than just inflation itself. So reddit, what's your take? What factors do you think will influence the current pro-inflation market and what do you see as the outcome? As always, I am not a financial advisor, and this is not financial advice.   submitted by   /u/xsist [link]   [comments]
    [visit article]
  41. In One Chart: Rising bond yields mean these stock-market sectors have the most to gain — or lose (22/02/2021 - Market Watch)
    Rising bond yields are sending shivers through the stock market. Here's a sector-by-sector breakdown of what history says about a rising rate environment.
    [visit article]
  42. How does inflation impact the stock market, if it really does end up coming? (27/04/2021 - Reddit Stocks)
    Many predict inflation may become huge in the coming months. Wondering if this is supposed to be a bullish or bearish thing to expect? Some tell me it'll lead to another bull run since prices going up, means stock market prices going up with it. Others tell me it means people will be hesitant to spend money, impacting businesses, thus drop stock market prices down, what's the right answer?   submitted by   /u/LifeInAction [link]   [comments]
    [visit article]
  43. Arent signs of inflation indications that the economy is recovering, thus leading to the stock market to just go up and up? why then do i hear people explain that inflation causes the stock market to go down? (11/04/2021 - Reddit Stock Market)
    From my understanding, increasing rates of inflation are signs that the economy is recovering. interest rates have an inverse relationship to inflation. higher rates of inflation results in lower interest rates and vice versa. with how the economy is right now, everyone is expecting signs of increasing rates of inflation as expected by the fed pumping more and more money into the economy (stimulus checks, etc). because of this, people are more willing to spend their money on products that businesses create, thus leading businesses to make even more money, leading them to create even more products which leads to a positive loop that just keeps on going up. if businesses do good, their stocks generally tend to go up. and since higher inflation rates leads to lower interest rates, the act of borrowing money increases which causes even more money to get spent on products and in stocks. because of this process, shouldnt higher inflation rates just cause the stock market to continue to go up? why do people say that the stock market will decrease due to higher inflation rates if my above explanation makes sense? i understand that things will generally be more expensive and that the dollar will decrease in value but wouldnt investing in the stock market (say S&P500) generally results in higher returns vs inflation? or is just 'some' inflation good and we just have not reached 'astronomical' rates of inflation yet that would be bad for the economy/stocks? if you take a look at the history of interest and inflation rates, we are much more on the lower side vs what we were decades ago? hope my question makes sense, thanks for any help i can get!!   submitted by   /u/whitecat69 [link]   [comments]
    [visit article]
  44. Bond Report: U.S. Treasury yields edge up from 3 month lows ahead of May inflation data (10/06/2021 - Market Watch)
    U.S. government bond yields edge higher Thursday, rising from their lowest levels in about three months, ahead of a closely watched reading of May inflation at 8: 30 a.m. Eastern Time that could serve as an inflection point for Treasurys.
    [visit article]
  45. Bond Report: U.S. Treasury yields hold steady ahead of inflation data (12/05/2021 - Market Watch)
    Treasury yields hold steady Wednesday morning, as fixed-income investors awaited a reading on the U.S. consumer price index due at 8:30 a.m. Eastern that may show a rise in inflation as the economy recovers from the COVID pandemic.
    [visit article]
  46. Are we in a stock market bubble? Or are these reasonable prices based on rising inflation? (16/06/2021 - Reddit Stocks)
    The official CPI year-over-year inflation rate is 5%, but annualizing the last 3 months of data puts inflation at 8%. Worse yet, if we use the traditional CPI components, not the misleading ones used in recent years, then inflation is over 12%.   submitted by   /u/Extremely-Bad-Idea [link]   [comments]
    [visit article]
  47. Can someone explain to me why bond yields are becoming so important now? (17/03/2021 - Reddit Stocks)
    What am I missing? It seems as if the 10 year bond yield was double what it is now, yet it didn't stop or slow down the bull market that went on back then, so why are people saying this is the reason for the market being pulled down? I thought the market tended to go up with inflation, so why are we going down?   submitted by   /u/RowanHarley [link]   [comments]
    [visit article]
  48. NewsWatch: What does inflation mean for the stock market? It’s supposed to be a positive—but investors are spooked now (12/05/2021 - Market Watch)
    Inflation is supposed to be a positive for the stock market, but signs of growing price pressures are rattling equities across sectors this week. Here's why.
    [visit article]
  49. Bond Report: U.S. Treasury yields mixed ahead of inflation report (25/06/2021 - Market Watch)
    Treasury yields were trading mixed ahead of the Federal Reserve's preferred inflation gauge, the personal-?consumption expenditures, or PCE.
    [visit article]

For more information mailto [email protected]. Disclaimer.