Rising Bond Yields Shift Market Focus

FINANCE
Rising Bond Yields Shift Market Focus

Bond yields are climbing rapidly, with the 10-year Treasury yield surpassing 4.8%, its highest since late 2023, and the 30-year Treasury nearing 5%. Rising yields, driven by a blowout December jobs report and strong economic growth, are increasing borrowing costs, including mortgage rates now hovering near 7%.

The Federal Reserve’s recent rate cuts aimed at easing financial conditions haven’t stemmed this bond market sell-off. Investors worry that resilient labor data and inflation risks, potentially heightened by President-elect Donald Trump’s policies, could force the Fed to pause cuts—or even consider hikes in 2025.

While rising yields pressure stocks, compressing corporate valuations and profits, some experts see opportunity. Higher yields make bonds more attractive, offering risk-free returns that rival equities. Analysts note that long-term yields reflect economic strength and reduced recession fears, with investors demanding greater returns for long-term investments. For fixed-income investors, this volatility may signal a strategic entry point.

FINANCE
Dimon Supports Strategic Tariff Use

JPMorgan Chase CEO Jamie Dimon believes tariffs, if properly implemented, can address challenges like unfair competition and national security risks. Speaking on CBS News’ Sunday Morning, Dimon acknowledged tariffs’ potential harm if misused but highlighted their strategic value in fostering resilient, diversified supply chains.

While Dimon has not discussed tariffs directly with President-elect Donald Trump, he described Trump as a tough negotiator, noting that his policies often aim to counter foreign unfair practices. Trump’s planned tariffs on imports from adversaries like China and allies such as Canada and Mexico have raised concerns about supply chain disruptions, economic slowdowns, and rising prices.

Dimon also discussed broader policy issues, supporting efforts like the proposed Department of Government Efficiency led by Elon Musk and Vivek Ramaswamy. Dimon emphasized the need for sound policies during what he described as the most precarious geopolitical climate since World War II.

TECH
China's Electric Car Market Slows

China’s electric car market, which saw explosive growth in recent years, is expected to slow significantly in 2025. Analysts predict new energy vehicle (NEV) sales will rise by just 15-20%, a sharp decline from last year’s 42% surge. HSBC’s Yuqian Ding highlights that only a few automakers, including BYD, Tesla, and Li Auto, turned profits in 2023, with intense price wars squeezing margins across the industry.

Government subsidies and consumer incentives have fueled NEV growth, but overcapacity and reduced R&D budgets are pressuring automakers. BYD’s sales grew by 40% last year, yet projections for 2025 show a modest 14% increase. Analysts expect industry consolidation to accelerate as weaker players struggle to survive.

To compete, automakers are increasingly focusing on smart features, in-car entertainment, and driver-assist technologies. While growth moderates, companies like Appotronics plan to innovate with laser-based technologies, targeting future opportunities in a rapidly evolving market.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.