Thursday's stock market rout is just another reminder that flat yield curves and equity investing do not mix.
The Federal Reserve's decision to raise interest rates for the fourth time this year, while signalling further tightening in 2019, has sparked a quick reaction in government bond markets around the world and rekindled concerns of a near-term recession in the world's biggest economy.
The Federal Reserve raised U.S. interest rates on Wednesday for the fourth time this year, but officials signaled that they might pause or halt the rate-hiking campaign early next year.
The Federal Reserve is widely expected to boost the benchmark for short-term borrowing costs at a meeting that concludes Wednesday. Fed officials may also signal that they might pause or halt the rate-hiking campaign early next year.
European stocks extended gains Wednesday, while government yields eased, after European Commission officials confirmed a budget deal with Italy that will allow the region's third largest economy to avoid censure for overspending.
President Donald Trump's $1.5 trillion of tax cuts, designed to stimulate growth, have decimated government revenue, ballooning the federal budget deficit and forcing Treasury Department officials to cover the gap by borrowing money in ever-growing amounts. Investors face losses in 2019 as yields on Treasury bonds necessarily rise -- to attract enough buyers for the debt.
Fixed income investors are starting to position themselves for a pause in Federal Reserve rate hikes, perhaps as early as this week, as investors bet the current equity market turmoil, slowing growth signals and pressure from President Donald Trump could test the central bank's tightening resolve.
The Teacher Retirement System of Texas lost 0.6% during the third quarter on its $14 billion holdings of stocks from countries like China, Brazil, Russia and Turkey. Such declines helped to cap the fund's overall return to 2.2% -- well below the average for U.S. institutional investment plans.
U.S. retail sales grew by a much stronger-than-expected pace last month, the Commerce Department said Friday, with purchases fueled by falling gas prices and booming consumer sentiment amid a record Black Friday to Cyber Monday shopping period.
The evidence that inflation Is slowing Is mostly circumstantial.