$NVIDIA(NVDA.US) $Palantir Tech(PLTR.US) $Tesla(TSLA.US) and other long duration stocks are likely to be impacted most if 10yrTYs continue to rise. In today’s pre-mkt trading, tech stocks extended last week’s losses, with $NVIDIA(NVDA.US) -1.6%, $Palantir Tech(PLTR.US) -2.3%, and $Tesla(TSLA.US) -1.0%. Higher P/E stocks get hurt most when long-term treasuries rise because a significant % of their value is “in the tail” which when discounted at a higher rate impacts their values disproportionately.
Why are long-term interest rates rising when traders are discounting 90% odds of the Fed cutting short-term rates at their Sept 16-17 meeting? Because investors are worried that long term inflation expectations remain sticky to the upside, driven by higher tariffs, higher deficit spending, and a more dovish Fed once Trump appoints a new Fed chair after Jay Powell’s term ends in May.
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