The surge in yields is pushing up mortgage rates, likely causing painful losses for many investment funds and banks that could in turn curb lending in the economy.
It is also pushing borrowing costs up across the developed world and sucking much-needed money out of emerging markets, while lifting the bar for buying stocks at all.
Measured by MSCI’s Asia ex-Japan index, Asian stocks hit an 11-month low on Friday. Curiously, the dollar hasn’t moved higher with the latest leap in yields, perhaps because currency traders see recession in the offing.
Fed Chair Jerome Powell said little that markets didn’t already know on Thursday, but in keeping his options open he kept the pressure on bonds.
“A range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little,” he said.
“We will make decisions … based on the totality of the incoming data, the evolving outlook, and the balance of risks.”
/cloudfront-us-east-2.images.arcpublishing.com/reuters/GKX7TEQ6J5NWPHEMTOVPTZLPE4.jpg "Bonds haunted by uncertainties old and new 38")
