TBT
As 10-year Treasury yield nears 1.5%, watch out for an 'equities riot'
- Long-term rates are rising sharply again, with the 10-year Treasury
yield approaching 1.5% for the first time in more than a year.
- The 10-year yield is up 8 basis points to 1.47%, having hit an earlier
high of more than 1.49%.
- The 30-year is rising 5 basis points to 2.29%.
- The spread between the 10-year and 2-year is at 1.34 and has doubled
in four months to the widest gap since 2016.
- The bond selloff is weighing on equities as valuations come under the
microscope with yields rising, and there's concern the TINA trade is
evaporating.
- Albert Edwards, global strategist at Societe Generale, had said that a
move to 1.5% in the 10-year would prove too bearish for stocks. But in a
note today, he says equities are currently just "squishy."
- Right now, "the long bond bull market remains intact, even if 10y
yields rise to 2% - or a bit beyond," Edwards writes. "But with bubbles
everywhere waiting to burst, a Japanese-style equity riot may be close."
- "To be sure, if bond yields continue to rise and there is a smooth
rotation out of growth and defensive stocks into value and cyclical
stocks,
the Fed will remain sanguine," he adds. "But the risk is growing that
with
so many bubbles blown by the Fed something will burst soon. And despite
the
widespread certainty that the Fed can micro-manage the equity market, and
levitate it at will, the real shocker would be if the Fed lost control in
any impending equity riot."
- A Rubicon was crossed in monetary early in the pandemic and now the
"revolutionaries" have "hoisted there own MMT policy ensign" and captured
the levers of policy, Edwards writes.
- Among bond ETFs (NYSEARCA:TBT) +2.7%, (NASDAQ:TLT) -1.4%, (NYSEARCA:TIP
) -0.7%, (NASDAQ:IEF) -0.8%, (NASDAQ:BND) -0.6%, (NASDAQ:VGLT) -1.3%
- The S&P (NYSEARCA:SPY) -0.9% and Nasdaq 100 (NASDAQ:QQQ) -1.6 are down.
- Yesterday, Wall Street veteran Adam Crisafulli said that a 1.75% print
on the 10-year would see pronounced compression of P/E valuations.
|Today, 11:40 AM|11 Comments
As 10-year Treasury yield nears 1.5%, watch out for an 'equities riot'
- Long-term rates are rising sharply again, with the 10-year Treasury
yield approaching 1.5% for the first time in more than a year.
- The 10-year yield is up 8 basis points to 1.47%, having hit an earlier
high of more than 1.49%.
- The 30-year is rising 5 basis points to 2.29%.
- The spread between the 10-year and 2-year is at 1.34 and has doubled
in four months to the widest gap since 2016.
- The bond selloff is weighing on equities as valuations come under the
microscope with yields rising, and there's concern the TINA trade is
evaporating.
- Albert Edwards, global strategist at Societe Generale, had said that a
move to 1.5% in the 10-year would prove too bearish for stocks. But in a
note today, he says equities are currently just "squishy."
- Right now, "the long bond bull market remains intact, even if 10y
yields rise to 2% - or a bit beyond," Edwards writes. "But with bubbles
everywhere waiting to burst, a Japanese-style equity riot may be close."
- "To be sure, if bond yields continue to rise and there is a smooth
rotation out of growth and defensive stocks into value and cyclical
stocks,
the Fed will remain sanguine," he adds. "But the risk is growing that
with
so many bubbles blown by the Fed something will burst soon. And despite
the
widespread certainty that the Fed can micro-manage the equity market, and
levitate it at will, the real shocker would be if the Fed lost control in
any impending equity riot."
- A Rubicon was crossed in monetary early in the pandemic and now the
"revolutionaries" have "hoisted there own MMT policy ensign" and captured
the levers of policy, Edwards writes.
- Among bond ETFs (NYSEARCA:TBT) +2.7%, (NASDAQ:TLT) -1.4%, (NYSEARCA:TIP
) -0.7%, (NASDAQ:IEF) -0.8%, (NASDAQ:BND) -0.6%, (NASDAQ:VGLT) -1.3%
- The S&P (NYSEARCA:SPY) -0.9% and Nasdaq 100 (NASDAQ:QQQ) -1.6 are down.
- Yesterday, Wall Street veteran Adam Crisafulli said that a 1.75% print
on the 10-year would see pronounced compression of P/E valuations.
|Today, 11:40 AM|11 Comments
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