The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Yields keep climbing
S&P 500 futures traded higher in the premarket but as the yield curve moved, futures came under pressure. The index opened about flat but went negative immediately. The index held in the range of down 10 to down 20 for the morning but fell a bit more in the afternoon. The Treasury yield curve began the morning with a steepening twist but finished with yields climbing across the curve. Crude increased across its curve as well. News was light and economic data was thin. Capital flow was light at 79%.
The US yield curve remains a negative influence for stocks. Headlines and data don’t provide clear catalysts for the continued climb of interest rates. This is a global phenomenon however. The US 30-year yield hit its highest since 2007. France’s 10-year hit its highest since 2009. Germany’s 10-year hit its highest since 2011. Japan’s 10-year hit its highest since 1996.
The global bond market is acting in concert and it is pushing yields higher everywhere. The question is why. Inflation pressures and concerns are the narrative in the US… could it actually be a global narrative? Are massive global flows rejecting sovereign fixed income regardless of the country? There are more questions than answers when it comes to rates trending higher.
If they keep climbing, they will keep a lid on the US equity bull market. The (global) bond market needs to let the rest of us know what it is worried about. I’m very curious as to what it could be, or if we’ll ever get a clear answer.
See you tomorrow.
-Mike
Visdom Market Commentary
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