Stock futures rose Thursday following the Federal Reserve's first interest rate hike in three years, which triggered a market sell-off on Wednesday. The Fed raised the federal funds rate by a quarter point to 3.75%-4%, with Chair Kevin Warsh signaling potential additional hikes as inflation remains elevated at 3.4%. Asian markets showed mixed performance, while investors await jobless claims and housing data for economic signals.
The 10-year Treasury yield hit its highest level since 2007, approaching 5%, which may not immediately break markets but could expose vulnerabilities in housing, commercial real estate, and heavily indebted companies over 12–18 months as refinancing at higher rates becomes necessary. The strain will likely emerge first in housing as mortgage rates approach 8%, followed by stress among leveraged borrowers and commercial real estate, with duration of elevated rates mattering more than the exact yield level.