In the post-Covid world, the stock market is supposed to go down when bond yields go up, but recently, stocks haven’t reacted much to the bond market. Something has to give.
In roughly the past month, the
yield has risen to 3.77% from 3.37% on Jan. 18, the low for the year. Driving that has been stronger-than-expected economic data, which means the rate of inflation may decline at a fairly slow pace. More-persistent inflation means the Federal Reserve, which has been lifting interest rates to slow down the rise in prices by reducing demand for goods and services, is likely to keep on doing so.