[video] Cramer Quick Take: Yield Alert
NEW YORK (TheStreet) -- Although the 10-year Treasury yield declined slightly on Tuesday, it has moved higher far too quickly for most. TheStreet's Jim Cramer and Debra Borchardt detail what happens if the momentum fails to reverse.
The big question heading into Wednesday's Federal Reserve FOMC meeting remains: Will the Fed begin tapering in September?
Cramer was quick to note that CD rates have barely budged, although the 10-year Treasury yields are quickly approaching 3%. This allows the banks to lock in a huge spread between what they receive and what they're paying out.
Beyond the banks, however, a rising rate doesn't help many investors. Near 3%, it will likely push a lot of investors who flocked to stocks while chasing yield, back into bonds.He added that the tapering almost doesn't matter anymore, since the Fed has either lost control of interest rates, (and will not taper), or they will taper and stop buying bonds. But one thing remains: Higher interest rates. Should the 10-year Treasury rate continue higher, to say, 3.25%, Cramer concluded that this would have an adverse effect on stocks. He added, the stock market wants to go higher, but rates will have to come down for that to happen. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
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