NEW YORK ( TheStreet) -- An important piece of news seems to have been overlooked, or even ignored, in the past month, thanks to our nation's debt ceiling debacle and Affordable Care Act bickering.
We all know that Janet Yellen has been nominated to succeed Ben Bernanke as the next Federal Reserve chairperson. Yellen is notoriously dovish, meaning she has supported Bernanke's stance on short-term interest rates and is likely to remain highly accommodative into 2014. This isn't news either, but digging a little deeper, we can see that the continuation of Bernanke's policies may have farther-reaching effects than it appears at first glance.
Why is this so important?
We all saw the stock, bond and housing markets' reaction to the perceived threat of rising rates during the month of June. After all, on May 21 Bernanke reminded us to "drink like gentlemen," because the bar will inevitably run dry at some point. We saw the Dow and S&P 500 take a quick 6% dip and the bond market crater as yields climbed from 1.94% to 2.54% on the 10-year Treasury Note over that five-week stretch. Over that period, any asset class characterized as a "dividend" or "yield" instrument was somewhat indiscriminately bludgeoned:Surveying the damage pictured above:
(-7.53%) - Utilities, IDU
(-7.63%) - Long-term U.S. Treasury Bonds, TLT
(-9.25%) - Master Limited Partnerships, AMJ
(-15.96%) - REITs, VNQ