{"id":11966,"date":"2022-10-03T12:55:19","date_gmt":"2022-10-03T12:55:19","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=11966"},"modified":"2022-10-03T12:55:21","modified_gmt":"2022-10-03T12:55:21","slug":"super-thursday-impact-10-year-yields-spike-uks-bold-economic-approach","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/super-thursday-impact-10-year-yields-spike-uks-bold-economic-approach\/","title":{"rendered":"&#8220;Super Thursday&#8221; Impact, 10-year Yields Spike, UK&#8217;s Bold Economic Approach"},"content":{"rendered":"\n<p>In today\u2019s Steady Investor, we cover current events that we believe are shifting the current state of the market, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Central banks raising interest rates around the world<\/li><li>Yields on long-duration U.S. Treasury bonds shoot higher<\/li><li>U.K.\u2019s new economic approach<\/li><\/ul>\n\n\n\n<p><strong>How \u201cSuper Thursday\u201d May Have Driven Equity Market Volatility \u2013 <\/strong>Many market commentators have focused on the Federal Reserve\u2019s rate increases as a driver of market volatility, but there may be an even bigger force at work: the world\u2019s central banks. Some readers may remember in the years following the Global Financial Crisis that central banks coordinated rate cuts and monetary loosening in an effort to revive the global economy. Though global central banks are not currently coordinating monetary policy in an effort to reduce inflation, many of the world\u2019s most important banks are moving in the same direction at the same time. Such is the genesis of \u201cSuper Thursday,\u201d which saw many of the world\u2019s key banks raise benchmark interest rates on the same day. In addition to the Federal Reserve\u2019s 75 basis-point increase, rates also rose in Sweden, Switzerland, Taiwan, the U.K., South Africa, and more. According to the Organization for Economic Cooperation and Development, inflation across the world\u2019s 20 leading economies was 9.2%, so every country is essentially waging the same battle. But that has also led to worries that the sum of all of these central bank actions could impact global demand more than individual countries expect, which could result in a recession that is bigger and deeper than necessary to stem price pressures. When asked about this issue, Federal Reserve Chairman Jerome Powell responded that the Fed already considers other central bank decisions as it sets policy domestically, so global monetary conditions are taken into account.<sup>1<\/sup><\/p>\n\n\n\n<p>__________________________________________________________________________<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/black-swan-investing-playbook?source=blog&amp;medium=website&amp;term=steadyinvestor_blog_10_03_2022&amp;content=black_swan_guide\">Thinking About Exiting The Market? Here\u2019s What You Need to Know!<\/a><\/u><\/strong><\/p>\n\n\n\n<p>It\u2019s easy for investors to react emotionally to news and headlines surrounding market volatility. And in the current environment, many investors may be thinking \u201cis it time to exit?\u201d<\/p>\n\n\n\n<p>To help you get the answer to this question and more, we\u2019ve put together a free investing playbook with insights and guidance to help you seek success when investing through these unprecedented times. If you have $500,000 or more to invest, get our free investing playbook today.<\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/black-swan-investing-playbook?source=blog&amp;medium=website&amp;term=steadyinvestor_blog_10_03_2022&amp;content=black_swan_guide\">Download &#8211; <em>The Black Swan Investing Playbook<sup>2<\/sup><\/em><\/a><\/u><\/strong><\/p>\n\n\n\n<p><strong>Yields on Long Duration U.S. Treasury Bonds Shoot Higher \u2013 <\/strong>The yield on the 10-year U.S. Treasury bond shot higher last week, at one point crossing 4% for the first time in over 10 years. As readers can see in the chart below, the 10-year has been on the move since the early days of the pandemic, but yields have made a pronounced move higher in 2022. Investors have been selling bonds all year as the Federal Reserve continues to surprise to the upside with rate increases and projections for future rate increases, and upward pressure on the 10-year has also come as the Federal Reserve has ended its QE program and allowed maturing bonds to fall off their balance sheet without replacing them.<sup>3<\/sup><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"395\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/10\/pic1-1024x395.png\" alt=\"\" class=\"wp-image-11967\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/10\/pic1-1024x395.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/10\/pic1-300x116.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/10\/pic1-768x296.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/10\/pic1.png 1168w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption><strong><em>Source: Federal Reserve Bank of St. Louis<sup>4<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong>The Market Isn\u2019t So Sure About the U.K.\u2019s Bold New Economic Approach \u2013 <\/strong>The U.K. government and the Bank of England are at odds over policy-making decisions, with the government aiming to ratchet up economic growth at a time that the central bank is trying to cool it down in an effort to tamp down inflation. The U.K.\u2019s new prime minister, Liz Truss, announced last week a sweeping plan to cut corporate taxes and taxes on the highest income earners while implementing new spending, both of which are designed to spur economic growth and consumer demand. On the other hand, the Bank of England has been raising interest rates since December and trying to cool growth in an effort to halt the surge in prices, much like the Federal Reserve has been doing here in the U.S. Bond and currency markets in the U.K. signaled that market participants were not convinced this approach in the U.K. would lead to the desired outcome, and most wagers were that it would further exacerbate inflation. The British pound fell to its lowest level ever against the U.S. dollar on the news, and yields on U.K. gilts (bonds) shot higher.<sup>5<\/sup><\/p>\n\n\n\n<p>Events, such as the ones listed above, can easily cause uncertainty when trying to plan your financial future. While it\u2019s difficult to remain calm, it\u2019s also important to take actions right now that have the greatest potential to define your financial future.<\/p>\n\n\n\n<p>That\u2019s why we have put together a free investing playbook<sup>6<\/sup> with insights and guidance to help you seek success when investing through these unprecedented times. If you have $500,000 or more to invest, get our free investing playbook today. You\u2019ll learn about seven time-tested guidelines to help you seek investing success.<sup><\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key banks around globe raise rates on \u201cSuper Thursday\u201d, long duration U.S. Treasury bonds shoot higher, market unsure about UK economic approach<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-11966","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11966","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=11966"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11966\/revisions"}],"predecessor-version":[{"id":11969,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11966\/revisions\/11969"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=11966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=11966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=11966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}