WHY RISING YIELDS ARE PROBLEMATIC FOR SP500
Have you ever wondered why on Earth equity traders cannot take their eyes off from US10Y chart?
The answer is the alternative trade. What does that mean?
When you invest in a company, such as buying its stock, you are taking risk. However, US10Y are riskless. This means every time you take a risk, you have to look at what the other less risky investments promise in returns.
This is why US10Y matters. As it rises, it puts lots of question and uncomfortable thoughts into investors mind. Should the investor take risk and buy the stock hopefully earning 10% or should just invest in US Treasury bonds and receive a yummy fat coupons?
That is why US10Y matters a lot and it is telling us that the 2024 holds volatile for assets.
-Signalwyse Team
The answer is the alternative trade. What does that mean?
When you invest in a company, such as buying its stock, you are taking risk. However, US10Y are riskless. This means every time you take a risk, you have to look at what the other less risky investments promise in returns.
This is why US10Y matters. As it rises, it puts lots of question and uncomfortable thoughts into investors mind. Should the investor take risk and buy the stock hopefully earning 10% or should just invest in US Treasury bonds and receive a yummy fat coupons?
That is why US10Y matters a lot and it is telling us that the 2024 holds volatile for assets.
-Signalwyse Team
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