October 20, 2021

Markets Stumble Amid Rate-Hike Worries, US Gov’t Warns It’s Running Out of Money

The party will soon be over. On Tuesday, investors came to terms with the fact that the days of record-low interest rates are coming to an end.

And that was just one part of a wild day on global markets. US stock sell-offs accelerated. Consumer confidence hit an unexpected wall. Oh, and then the US treasury secretary said the world’s most powerful economy is about to run out of cash.

Yield the World

Government bond yields were the biggest reason markets stumbled yesterday. When they go up, it signals that markets anticipate interest rate hikes, which make borrowing more expensive. The yield on the 10-year US Treasury note rose 0.05% to 1.539%, the highest it’s been since June.

The Federal Reserve already said last week that half its board expects interest rates to rise in 2022 and, on Monday, the Bank of England said hikes in the UK were also likely. Both central banks have hinted…

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