As of midday on Wednesday, all eyes were riveted on financial markets as the 10-year benchmark note yield was trading at or around 4.3%. This is an astounding increase from the approximately 2% rate seen the week of March 11, 2022. That week would turn out to be the Federal Reserve’s first rate hike of this cycle.
The current landscape of interest rates creates a bit more complicated picture. That’s a big difference — last week, the five-year annual percentage yield was 1.69%. This is an extraordinary contrast to the rates we saw in March of 2022. Credit card rates sit near all-time highs, currently at 20.12%, a stark increase from the 16.34% that was recorded in March of 2022. Although troubling, these figures are indicative of still playing economic changes as consumers move through a market with increased costs to borrow.
On top of rising credit card rates, mortgage rates have jumped as well. For the week ending May 2, that rate was pegged at just under 6.9%. This is a big jump from the 4.29% rate logged in March of 2022. This historic and unprecedented jump in mortgage rates is set to have a massive ripple effect on home buyers and the real estate market as a whole.
The U.S. 10-year yield was last at 4.287%. At the same time, the yield on the 2-year note inched higher by 1 bps to 3.8%. Central bank policymakers are widely expected to hold the line on interest rates between 4.25% and 4.5% in their next three meetings. This prudent approach just demonstrates their recognition of the uncertain economic times we’re in.
To further illustrate the changing financial environment, banks paid 0.5% APY on CDs in March 2022. By September of last year, that number had jumped to 2.87%. This increase is indicative of a wider trend of rising yields on all financial products.
In better-market news, Disney’s earnings surprise propelled the Dow Industrials and the S&P 500 to a notable gain today. This fully demonstrates how big corporate earnings can set the tone for the broader market.