When inflation is expected to stay high, investors tend to sell Treasurys because the yields on those bonds tend to provide little to no return once you account for inflation. As that happens, the selling pressure on the bonds tends to force Treasurys to pay higher rates. Yields then rise in response. The result can be higher mortgage rates. But not always.Not necessarily. Inflation is far exceeding the Fed’s 2 percent target. Fewer investors are buying Treasurys as a safe haven.
The Fed’s rate hikes won’t necessarily raise auto loan rates. Car loans tend to be more sensitive to competition, which can slow the rate of increases.Probably, though it would take time. Savings, certificates of deposit and money market accounts don’t typically track the Fed’s changes. Instead, banks tend to capitalize on a higher-rate environment to try to thicken their profits. They do so by imposing higher rates on borrowers, without necessarily offering any juicer rates to savers.
The exception: Banks with high-yield savings accounts. These accounts are known for aggressively competing for depositors. The only catch is that they typically require significant deposits.
What shift? We've known for months this was likely happening in March. Stop pushing this narrative.
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