Can emerging markets stocks be used as an indicator for where bonds are going next?
With last week’s spike in bond yields, investors are left somewhat dumbfounded. On the one hand, higher interest rates are supposed to be bad for stocks. On the other hand, stocks had their highest-ever close. However, the stocks where US interest rates matter most aren't in the most obvious places.
Rates went up last week after the Federal Reserve's Open Market Committee's October meeting notes were released hinting that maybe – just maybe – they would consider tapering it $85 billion monthly bond-buying operations at some point in the near future. The markets are now anticipating higher rates down the road.
"Longer-term, they're going over 3% for 2014," predicts John Stephenson, portfolio manager at First Asset Investment Management. "In the short run, they're coming down."
While many in the market look at interest rate levels to determine what'sRead More »from Is this a secret indicator for bonds?