The market has been forced to realize that most indications are that the US central bank, the Federal Reserve, will keep the policy rate high well into next year. The Fed, which thus wants to reduce inflation, stated last week that interest rate cuts in 2024 will probably be smaller than analysts had predicted. Today’s policy rate is the highest since 2001.
While stock prices on Monday mostly moved sideways, the yield on ten-year government bonds rose to 4.54 percent, close to the record from 2007. As recently as May, the ten-year yield was around 3.5 percent.
The Dow Jones industrial index rose 0.1 percent, the broad S&P 500 rose 0.4 percent and the technology-heavy Nasdaq composite index rose 0.5 percent.