April Jobs Report: A Prelude To Higher Rates?
Stocks may continue to rise if growth strengthens further, but keep in mind that if interest rates start to rise, it will create a bit of a headwind for stocks. With the market having already rallied by 15 percent so far this year, it's biggest move may have come in anticipation of better news, leaving less potential for further gains should the economy actually improve.
Savings accounts should eventually see higher rates if bond yields continue to rise, but expect banks to lag behind the bond market at a cautious distance. Banks may be quicker to raise mortgage rates, since current mortgage rates are so low they represent a risk to banks if interest rates start rising.
Before any of this plays out, however, the economy will have to prove it can sustain this momentum. The next jobs report, due in early June, will be a key indicator. In the meantime, the latest news remains a positive twist rather than a definitive turning point.
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