Interest rates moved higher following the Georgia Senate races. Why might this be a big deal?
With the senate races behind us, we can finally move on from election season. One clear move following the result of the Georgia senate races was a move higher in interest rates. The 10-year Treasury hit and crossed above 1% for the first time since March. We believe there are two main reasons why. First, a democrat-controlled congress means more government spending and stimulus, which could lead to higher growth. Second, inflation expectations have moved higher due to increases in raw materials and commodity prices. What we need to monitor is the speed in which interest rates move higher. If it’s an orderly rise, then stocks can live with it. If we see a continued spike higher in rates and inflation expectations, it could cause a problem.
For the week ahead and continuing this discussion on interest rates and inflation expectations, we do get a couple data point on inflation this week with both the Consumer Price Index and the Producer Price Index. So, let’s see what these reports tell us and if there is any market reaction.
Lastly, please join us this Wednesday, the 13th at 1 pm EST for our 2020 Market Review Webinar where we take a look back at 2020 and discuss our outlook for 2021. Register at assetstrategy.com/events.
For a more detailed market report head on over to our Insights page. Where there are some of the key economic data points to be released this week. Also, subscribe to our YouTube channel and check out some of our other social media pages.
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