Bond Yields Are Soaring. Why That's Bad for Homebuilder and Automaker Stocks.
Yahoo Finance ·
Most investors have heard by now that yields on government bonds are soaring. It's been on the front page of every newspaper. Yields are rising as bond investors around the world are selling many of their longer-maturity bonds -- like those maturing in five, 10, and 30 years -- amid worries about rising U.S. government debt and inflation. When they sell those bonds, their prices fall and their yields, which move in the opposite direction of price, rise. That might seem to many stock investors like a bond market problem -- and thus nothing to really worry about. But in fact, rising yields have a huge impact on the stock market in multiple ways. One particular impact of rising yields is on homebuilder and automaker stocks . Because auto and home loans are based on bond yields, higher yields make home and auto purchases more expensive to finance.
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