STE's Stocks Investing Journey

This is probably one of the hottest topics where you can see and read from all over the business news headlines in the last two weeks. What is “ Inverted Yield Curve “ and why is it so important that draw so much attention from financial strategist/economist/investors/fund managers all over the world. Discussing, pondering and arguing about the impact and direction of the economy due to this so-called “ Inverted Yield Curve”, relentlessly.

Interest rates increase was really a hot topic in the last two weeks since US 10 Years Treasury Note hits above 3% for the first time since 2014. The market also reacts negatively with full of comments on interest risk due to this increase. 10-year Treasury yield hits 3% for the first time since 2014 from CNN Money.com Why everyone is stressing about the 10-year Treasury yield from CNN Money.com “Auto loans, home mortgages, and other loans are tied to the benchmark 10-year yield. Investors fear that higher interest rates could start to eat into corporate profits and also signal that more inflation is coming.” This is why everyone is paying so much attention to the 10 years Treasury Note. Some even talk about “ Inverted Yield Curve “ ….

<Image credit to CNBC.com> So, it is final that FED increased interest rate by 25 basis points on last Wednesday and you could easily find news and comments on the impact of stocks and economy with this rate hike.  But at least the rate hike is seen as a  vote of confidence in the US economy which has witness increasing inflation and job growth and of course the market react positively on this. Our immediate thinking will be, of course, the cost of borrowing will increase as the bank will price in higher loan rate and this lead me to think further that will bank be benefited with higher loan cost eventually. Meantime, some analyst are more cautious on that because our banks are facing loan crisis from O&G sector hence may not be so sanguine on bank’s future earning.