Traders in all markets will be watching the bond market in the week ahead, to see if higher interest rates are here to stay.
The dramatic rise in rates in the past week was a shift in the dynamic of markets, and traders want to see if it will stick. The move came after the Federal Reserve Tuesday ended its rate meeting with no new sign that it would carry out another so-called quantitative easing program.
The Fed did upgrade its view of the economy slightly, and a number of Wall Street economists reversed cuts made to first quarter growth estimates the week earlier, when they saw stronger February retail sales data Tuesday.
“Investor behavior is going to be the key to next week,” said John Briggs, senior Treasury strategist at RBS.
Even with rising yields, stocks had their best week since December, with both the Dow and S&P 500rising 2.4 percent. The S&P 500 cracked the psychologically important 1400 level for the first time since June 2008, ending the week at 1404. Gold sold off, while the dollar rose in response to the rising yields but still finished the week slightly lower.
The 10-year yield rose to 2.301, from 2.04 the week earlier.Page 1 of 6 | Next Page