The yield on 10-year Treasuries has been climbing as investors recalibrate their expectations for Federal Reserve rate cuts amid persistent inflation concerns. This shift in sentiment comes as the Fed signals a more cautious approach to monetary easing, with the potential for fewer rate cuts this year. The rising yields reflect tighter monetary policies, which could compress profit margins for companies reliant on low borrowing costs. Additionally, the energy sector is seeing gains due to a rally in oil prices, while tech stocks face pressure from the recalibration of Fed expectations.
Market participants are also bracing for a volatile earnings season, with options traders anticipating significant stock price swings. According to strategists at Bank of America Corp., individual stocks in the S&P 500 are expected to move 4.7% on average in either direction post-earnings, marking the largest earnings-day moves on record. This heightened volatility is expected to drive increased options trading activity, as investors navigate the uncertain landscape.
As of 18:01 on January 13, the yield on 10-year Treasuries stands at 4.80%, up from the last close of 4.78%. This movement underscores the market's response to the evolving economic landscape and the Fed's cautious stance on rate cuts.