If the 10-year U. S. Treasury yield hits 4. 5 percent simply by year-end, the economy would probably clutter through — stocks, not so much, based on Goldman Sachs Group Inc.
Goldman’ s base-case scenario calls for the 10-year yield of 3. 25 % by the end of 2018, though the “ stress test” out to four. 5 percent indicates such a move might cause stocks to tumble, economist Daan Struyven wrote in a notice Saturday. He also said the particular economy would probably suffer a sharp slow down but not a recession.
“ An increase in rates to 4. 5% by year-end would cause a twenty percent to 25 percent decline within equity prices, ” the take note said.
While a recent drop in shares may have been fueled by concerns tied towards the 10-year yield approaching 3 %, many strategists have said they will felt equities could continue to increase until reaching 3. 5 percent or even 4 percent. It’ s investing around 2 . 86 percent since 6 a. m. New York period Monday.
The 20 percent to 25 percent fall in stocks, as measured from your S& P 500’ s January. 26 peak close of two, 872. 87, would take the measure to a range of approximately 2, 155-2, 298. It closed on Fri at 2, 747. 30 right after dropping as low as 2, 581 upon Feb. 8 at the apex from the recent volatility-fueled meltdown. If this situation did play out with Goldman’ s numbers, stocks would have a considerable ways further down to go.