Friends
The yield on the 10 year Treasury Note cleared the 3% level and then some posting the highest yield we have seen on the 10 year since 2011, as hints of inflation sent bond prices lower. That didn’t sit well with equity investors as stocks sold off early and remained in negative territory for the entire trading session. It will be interesting to see where bonds go now that the 3% support (price)/resistance(yield) level has been violated.
As for stocks, by the close the Dow Jones Industrial was down 193 points to finish the day at 24,706. The S&P 500 was down 18 points to close at 2,711. Gold was down $27 to trade at $1,291 per ounce, while oil was up $.21 to trade at $71.17 per barrel WTI.
The debate developing this year has been whether higher rates are detrimental to stock prices. The feeling has been that if rates are going up for the right reasons, strong economic growth, then higher rates are acceptable. On the other hand, if rates are rising because of inflation fears, especially inflation that isn’t married to economic growth, then higher rates will endanger the continuation of the long term bull market. Now, remember, this is only one day. Stocks had risen 8 days in a row up until today. But today’s move in bonds stokes the inflation debate again, and bring attention to the potential headwinds that stocks could face going forward. One day at a time.
Have a nice evening everyone.
