Peter Schiff Says Rising Bond Yields A Ticking Time Bomb For Stock Investors: 'What Matters Is Not The Rate Itself, But...'

On Monday, economist and author Peter Schiff cautioned stock market investors about their indifference toward escalating bond yields.

What Happened: Schiff expressed his concerns over stock market investors’ apparent disregard for the surge in bond yields.

He emphasized that this nonchalance ensures that yields will continue to rise until investors start paying attention.

Schiff stated, “StockMarket investors continue not to care about rising bond yields. That only ensures yields keep rising until they do. There’s no way to know the rate at which yields become a problem. What matters is not the rate itself, but that no matter how high it is, it will be reached!“

Why It Matters: On Monday, the 10-year Treasury yields reached 4.35% — the highest level since October 2007.

Schiff also gave out a warning in July when the stock market, particularly the Dow Industrials, experienced a prolonged rally, reminiscent of its 13-day winning streak in January 1987.

Back then, investors overlooked rising interest rates, a declining dollar, and increasing budget and trade deficits until these factors suddenly became significant.

The subsequent market collapse in 1987, often referred to as “Black Monday,” saw the Dow plummet by approximately 22.6%.

Prevailing market conditions in July echoed the excesses that led to the 1987 market crash, with interest rates at a 22-year peak and America grappling with massive debt.

The recent selloff in U.S. Treasury debt, driven by the Federal Reserve’s tightening policy and a resilient economy, has also raised eyebrows, offering bond investors a potentially lucrative buying opportunity. However, the overarching sentiment is that the U.S. economy has so far weathered the Fed rate hikes, defying recession predictions.

See Also: US Stocks Gear Up For Rebound As Traders Eye Nvidia Earnings; Jackson Hole Analyst Sees Bond Yield Concerns

It’s worth noting that Peter Schiff has consistently been vocal about economic trends and their implications. In a recent interaction, he supported Elon Musk‘s analogy of money’s worth, emphasizing that while governments can print money, they cannot produce resources.

Photo Courtesy: Wikimedia Commons

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