It was a trading session that saw stocks tumble, claw their way back and then plummet again when the yield on the 10-year Treasury note soared to a five-year high of 5.295 percent. The climb in bond yields exacerbated jitters about mortgage rates rising, which could hurt the already sluggish housing market, and about the Federal Reserve hiking interest rates, which would slow down corporate dealmaking.
Now, why would a rise in Bond Yields bad to the stock market? Simply because a higher bond yield will attract investors from stocks. It was also further aggravated by confounding comments from former Federal Reserve Chairman Alan Greenspan, who said he is not worried about foreign governments selling their U.S. Treasury holdings, but added that yields will likely rise in the future.
According to Bankrate.com, the average 30-year fixed-rate mortgage was at 6.33 percent Tuesday, up from 6.07 percent a week ago.
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June 13th, 2007 by financetwitter
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