Over the past few days, you’ve probably been hit with stories of rising bond yields.
I hate to admit it, but I even produced a bunch of yield stories this week. Love me, a good title!
Rising yields are one of the most important events happening in the markets today. It actually started this summer, but you know what I mean.
“I would say it’s not a crisis but an eye-opener, and that’s something you need to think about,” Rick Rieder, BlackRock’s chief investment officer for global fixed income, said on Yahoo Finance’s Sozzi Unleashed.
Rieder was among the finalists for the position of Fed chairman, which ultimately went to Kevin Warsh.
But I don’t want you to lose focus on the “why” of this decision. It’s not because of a warning about the national debt from a third-rate investment expert. That’s not the reason at all.
The reason is that the economy is weakening under the influence of inflation. And it’s falling just as the Federal Reserve is making it more expensive for businesses and you, the consumer, to borrow money.
Here are some red flags I noticed this week that no one is talking about except me.
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Executives at payroll services company Paychex (PAYX) said this week that we’re in a low-hiring, low-fire environment. This is hardly an optimistic economic endorsement.
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Lucky Charms maker General Mills (GIS) warned of more quarters of pressured margins due to a sharp recovery in inflation in sectors including wheat, diesel and packaging. I think this highlights what Fed hawks, like New York Fed President John Williams, are telling us about rate hikes.
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Cracker Barrel (CBRL) reported a 6.1% traffic decline in its most recent quarter. Darden (DRI) said sales at its Olive Garden chain rose just 1.1% in the quarter. Read: Much higher gas prices are eating up the disposable income of many households.
It’s always important to know the “why” when it comes to markets – and unfortunately, the “why” isn’t very relevant when it comes to returns.
Brian Sozzi is the editor-in-chief of Yahoo Finance, host of the Power Actors with Brian Sozzi podcast and member of the Yahoo Finance editorial leadership team. Follow Sozzi on @BrianSozzi, InstagramAnd LinkedIn. Any advice on stories? Email brian.sozzi@yahoofinance.com.
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