Bond Yields Keep Rising as Economy Remains Resilient

Despite the Fed’s aggressive monetary tightening and the regional banking crisis earlier this year, the U.S. economy has been surprisingly resilient. Bond yields continue to rise, with long-term Treasuries at their highest level since October 2007.

And industry insiders think that these higher yields could be sticky. Since the Fed’s meeting last week, the watchword on Wall Street has been “higher for longer.”

“Several issues have been driving bond yields higher over the last two months,” wrote Morningstar’s Tom Lauricella. “Most prominent is the continued strength of the U.S. economy, especially the jobs market, which is seen as the reason the Fed will keep interest rates at or near current levels for longer than what had been expected. In addition, the market is adjusting to a flood of new government bond issuance.”

See more: “Consider High-Quality Bonds if a Recession Doesn’t Hit This Year