This year’s stocks and inflation gnaw U.S’s future bond dramatically. Even though U.S government is always responsible for paying its bills for Treasury securities buyers, investors worried about Fed’s inflation grip.
Here is the straightforward inflation logic; too high inflation can raise interest rates. Fed’s job is to stabilize inflation swings. Right now however, investors expect Fed to lower interest rate. For investors’ side, this would stimulate the economy. Fed’s policy tools in reducing bond purchases and raising interest rates, deploy investors’ dystopia.
Joe Biden, U.S president urges inflation as a part of political responsibility to poise inflation. While, high interest rates and low bonds can affect the whole financial system for borrowers, businesses, and workers. Thus would impact to dramatic future bond.
Anne Walsh chief investment at Guggenheim Partners, came with analysis result of hazardous and dramatic low bond. Especially mid-2019 investors risked assets for returns. Report on supply chain disruptions leads her to conclude that this would drag future bond to post-World War II.
Recently in 2022, Bloomberg’s U.S. Treasury index reported that Treasuries creates annual losses since early 1970s. For bond investors it is already costly. Even before the pandemic occurred, Fed and Congress have made significant market actions. Then, during the pandemic the state has to pump huge amount of money for social welfare. Thus, Fed too is struggling to put market without harming economic growth.
Somehow, based on Wall Street strategies, Fed’s must have been in trouble putting its goal without causing serious damage. Meanwhile, high interest rates risk stocks and reduce company’s earning streams said Bloomberg. In the meantime, investors might have to adjust with the future’s market bond scary ride.
