The seismic shift to higher interest rates is likely to keep rocking stocks, as investors assess whether the economy can handle a tighter Fed.
Thursday’s trading was a fast-forward look at how Fed tapering might affect interest rates, and the “fast” rise in Treasury yields rattled stocks, triggering the worst stock selloff since June. The yield on the 10-year Treasury jumped to as high as 2.82 percent from Wednesday’s 2.71 after a six-year low in jobless claims suggested an improving job market. It settled off its high at 2.77 percent.
That and a 0.2 percent increase in CPI were enough to convince traders the Fed would move to reduce some of its bond-buying activity, possibly as early as September.
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