Dan Celia: Dont’ Stress Ten-Year Treasury Yield Topping 3%
PHILADELPHIA—Nationally syndicated host and biblical investing authority Dan Celia said today that many analysts are watching economic news closely this week—especially earnings. Celia discusses these and other global and economic headlines on his daily, three-hour “Financial Issues” program, heard on about 650 stations nationwide, as well as seen on the NRBTV network.
“The earnings reports are very heavy this week,” Celia said this morning. “We still have a long way to go, however, before we see the majority of S&P 500 companies reporting. But right now, earnings look very good. The question is, will it continue? Early this week, we’ll see four Dow components reporting, and it will be interesting to see how that goes. As things stand, earnings still look very strong.
“One of the questions that many people are asking is if this will be the best quarter earnings of the year,” Celia continued. “I don’t think so. I’ve been saying I think the second quarter of 2018 is likely to be better than the first, and the third will probably be the best of all. But here’s the thing—stocks have been whipped around recently over the U.S. bond yield for the ten-year. As of this morning, we have broken that important psychological break point of 3 percent. Now, I don’t think 3 percent is a big deal, and I don’t think we have too much to worry about until we get closer to 3.5 percent.”
The anticipated impact of the treasury yield is causing some concern in the markets, he added. When the ten-year interest rate goes up, borrowing costs for corporations also increase because most borrowing by corporations is tied to the ten-year.
“So increased borrowing costs could impact earnings for the next quarter,” Celia concluded. “And that is something that we might see the markets a little concerned about. Don’t forget—this is also impacting mortgage rates. Could it cool off a very hot real estate market right now?”
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