Volatile Market: A New Normal
World stock market continued it strings of volatile trading sessions recently when 10 Years Treasury Notes hitting 1.5%, a sign that FED is going to increase interest rate in near term due to higher “inflation expectation “post pandemic as economic is going to restore back to Pre-covid 19 level. <Image credit :GuruFocus.com> For me, it seems that the yield curve is just returning to normal level / pattern with upward slope and higher rate for long term treasury notes as compared to exceptional “ Inverter Yield Curve “during the pandemic. The short-term rate (1-5 years) remain extremely low and accommodative as mentioned by FED. The 10 Years Treasury rate mainly use to determine the mortgage rate and I think is quite healthy if rate is a bit higher than short-term as to indicate the risk on long term mortgage loan, also to avoid more speculative move in housing market. I am not sure if this increase of 10 Years treasury note will benefit the banking sector in near