the bond watch

Equities are clearly watching bonds for clues.


This is a precarious situation. With the US 10Y yield breaking above its long-term downtrend, equity prices have begun to wobble. It appears US yields will continue to rise, causing problems for equities.

The mood on Wednesday 01.31.18 seemed to have deflated by the end of the trading session. The Fed statement pretty much put a March rate hike in play.


When the Fed statement hit, 10Y yields went lower, then quickly rose to their highest level since April 2014, before going back down. The equity dip that came with the post-FOMC bond selloff showed just how sensitive the market is.

Seems stocks are dependent on bond yields and the dollar.

Macro drivers are in control. Bond yields are signaling the economic recovery is robust.

With the Dow close at 25,520.96 on Friday 02.02.18, which was down 665.75 or 2.54%, we’ll wait and see if a rally will be staged on Monday the 5th. But equities traders will probably wait and see what the 10Y has done.  We should too.

Source: Big Canaries from 02.01.2018

Published by mikebertelsen

Global market, trade, and financial news. I keep up to date with what I assess is important.

%d bloggers like this: