Martin Hash wrote:If The Fed bought the Bonds, the yield would go down, protecting stocks. The Fed is probably already doing it. I'm thinking anything that Imaginary Money can do to keep the ship afloat will be done.GrumpyCatFace wrote:Yields. The bond market drives stocks.
That’s where the Fed is dumping, and that’s where they’re borrowing to pay for the Tax Bill, Infinite War, and everything else.
Last week, the yield on bonds went over the dividend payout for the S&P. This week, it may top 3%. That’s going to trigger a mass rush for the exits.
So, what other things could bring down corporate sales? A big religious revival that convinces people to stop consuming?
No. When the Fed sells bonds, there is oversupply, so the yields go up.
They bought up the bond market since 2008, using magic money, which is why we’re at near-zero interest rates. Now they’ve announced they’re unloading, but they can’t. That magic money is about to become real.
As to your question, inflation will drive up the price of imports - the materials those companies sell.