Will 1% Yield Force the Fed Into Curve Control?
As the 10-year Treasury yield climbs, Wall Street’s 2021 outlooks provide clues for just how much of a selloff the central bank will tolerate.
Managing the curve.
Photographer: Mirco Lazzari gp/Getty Images
There’s nothing that whips Wall Street into a frenzy quite like a sharp move higher in U.S. Treasury yields.
For instance, consider this Bloomberg News headline from last Wednesday, when the benchmark 10-year yield touched 0.96%: “Treasury Yield Spike Risks Sparking Domino Effect in Markets.” Investors saw the possibility that stocks would be “vulnerable to a reasonably significant correction,” that the price of gold could stumble and that the dollar might weaken from an already two-and-a-half year low. All this, even though current long-term U.S. yield levels would have been unprecedented just 10 months ago and barely register as a blip on a chart of recent history.