Five Highs
The 10-Year Yield Is Now Scaring Folks Who Last Month Hadn't Heard Of The 10-Year Yield
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The Big Five-Oh
Here's the thing that is spooking more market participants than you might care to believe.
Yup. 5% bar the shouting. Now, if you had told folks back in October 2022 when the yield stood at around 4.3% that equities - particularly the rate-sensitive Nasdaq - would be up bigly in twelve months' time, but so would the yield? Then the right-thinking amongst them would have declared that hopium at best and nonsense at worst. Yet here we are - a huge decline in bond prices driving up the yield, but the NQ still sat at around 15,000.
The relationship between asset classes - equities vs. bonds vs. commodities - is complex indeed and we don't subscribe to a long-lasting mechanical relationship between them. For periods of time you can point to specific relationships between them but all such eras pass and the relationship changes. We've been saying for some that we thought yields could keep climbing at the same time as stocks, which is what has happened through much of 2023.
Now, if our chart on the 10-year holds water we should see a decline in the yield in the near future. It can run up over 5% for sure, but that's the level at which the chart starts to break down and we need to look again.
Let's get back to today.
Paying members, scroll right down for our latest take on markets. As always we look at the 10-year yield, the S&P500, Nasdaq-100, Dow Jones and the Russell 2000. We add Bitcoin and Ether futures pricing for good measure.
Note - to open full-page versions of these charts, just click on the chart headings, which are hyperlinks.
US 10-Year Yield
We said yesterday, "Looks like the 10-year is heading for a third re-test of recent highs". And about ten minutes later, it broke up through and past those highs. Now sat at 4.95% following a brief attempt at 5.0%