The 10-year Treasury yield spiked higher last week going from 1.52% to 1.76%. When interest rates move higher, quickly, you typically get market volatility and an environment where both stocks and bonds struggle. This is exactly what happened last week with the S&P 500 down almost 2% to start the month – with growth stocks down much more than that and bonds not providing any diversification benefits.
Outside of floating rate bonds, most bond funds find themselves down between one-to-one-and-a-half percent.
For the week ahead, we get several inflation data releases, and it comes at an interesting time when interest rates have made such a dramatic move higher. Let’s see how these inflation data points come in and, more importantly, how interest rates react.
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