Yesterday’s rise in Treasury yields, in the near term, impacted bond holders, but the more important implications may be the long-term impacts they will have on consumers and on the economy overall.
Both, in nominal and real terms, rates have been steadily rising. Ultimately, rising rates will have an effect on everything from corporate profits (i.e. increased borrowing costs) to the housing market (i.e. increased mortgage interest rates) to consumer spending (i.e. increased credit card interest rates). Eventually, too, it will have an effect on the Fed’s easy money policies. With the recovery from The Great Recession still in its infancy, rising rates are (for all but savers) not a good sign.
