Bank of England: won’t “hesitate” to hike rates “as much as needed.” Bond market fears much higher inflation and interest rates, for much longer.
But this time, there’s over 8% inflation.
Holy-moly mortgage rates close in on 7%.
But for yield investors: Short-term Treasury yields near 4%. Six-month CD yields at 3.5%, if you shop around.
In terms of diversification between stocks and bonds, there is none. Not anymore. They even nailed the bear market rally in lockstep.
Wait a minute… Six weeks ago, Goldman Sachs & JP Morgan talked investors into buying $600 million of new debt.
Few took the warning seriously that margin debt issued last year.
Higher rates eventually enforce a sort of discipline on the drunken party in government and even in the private sector. That would be a good thing.
Something has to give. And it’s going to be price.
Folks looking for yield have options now. Won’t beat inflation, but won’t get their face ripped off either.