The Risks of Rising Rates
By Kishore K. Yalamanchili
A featured article of our February 2021 edition of PRMIA's Intelligent Risk quarterly newsletter
The COVID-19 pandemic led to a major market dislocation in March 2020. While the S&P 500 dropped 33.9% from its peak in February to the trough in March, the 10-year yield fell to an intra-day low of 0.32%. Since then, rates have started to move higher with 10-year yield rising to 0.92%, and 2s-10s steepening to 80 bp (as of 12/31/20). This article examines the ramifications of rates normalizing in 2021 on some important sectors as the economy likely recovers with the availability of several vaccines for COVID-19 and possible additional fiscal stimulus.
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