Macro & Volatility™
Macro & Volatility™ #3: 4 cuts, 3 cuts, 2 cuts, NONE!
Jun 16, 2024
Michael Purves and Josh Silva analyze the impact of rising interest rates on the economy, VIX, and equity market volatility. They delve into historical comparisons with the 90's tech-driven rally, discuss potential implications of 4.5% or 5% Treasury Yields on VIX and stocks, and explore the effects of inflation control on fixed income and equity markets.
09:24
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Quick takeaways
- Potential increase in treasury yields due to fewer interest rate cuts, possible impact on market volatility.
- Comparison of current tech-driven rally to the 90s, highlighting importance of controlling inflation for market growth.
Deep dives
Impact of Rising Rates on Treasury Yields and Market Volatility
Rising rates have led to a potential increase in the 10-year treasury yield, possibly reaching 4.5% or even 5%. This shift is driven by market expectations of fewer interest rate cuts, with projections revised down to one or two cuts or possibly none. Additionally, factors like expanding term premiums and central bank policies contribute to the rise. The implications of such an increase on market volatility, especially for the VIX and equity markets, depend on whether it is driven by inflation or robust economic growth.
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