State Street Corp (NYSE:STT).'s CEO, Ron O’Hanley, predicts a 5% ceiling for the yield on 10-year US Treasuries, a level not seen since 2007. This surge reflects a full percentage point increase from early August and is driven by indications from the Federal Open Market Committee (FOMC) that interest rates are set to remain elevated for an extended period to counter inflation.
The FOMC perceives this rise in borrowing costs as a crucial step to temper economic growth. O’Hanley attributes this spike to concerns about inflation and escalating debt expenses, commending the Federal Reserve's data-centric approach.
In his recent address at the Future Investment Initiative in Saudi Arabia, O’Hanley highlighted the influence of geopolitics on market dynamics. He singled out the ongoing Israel-Hamas conflict as an immediate issue requiring prompt resolution. According to him, this conflict has led investors to adopt a cautious stance, impacting not only market trends but also the global political scenario.
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