«10x in 2 years.»
The 10-year Treasury yield is rising for its ninth straight week. What’s more, it’s grown from 0.40% to nearly 4% – a 10x increase- in a little over two years. It’s historic and is bringing untold pain to bondholders. Scratch that. It’s killing all risk assets.
If you overlay the ten-year yield with stocks, you’ll discover they have a near-perfect negative correlation right now. Rates up stocks down. With TNX going parabolic, it’s no wonder stocks can’t find a bottom. Fortunately, at this rate of ascent, TNX is about a week away from tagging 4.5% (45 in the chart), which should be the theoretical ceiling.
Because that’s the terminal rate for the Fed Funds. There’s a question as to whether the 10-year yield should even get that high because there’s bound to be a recession that pulls rates lower over the next few years.
If you want stocks to bounce, root for the squeeze in rates to ease. Knock it off already.
Video Of The Day: Queen’s Court – Covered Call Management
On today’s Queen’s Court, coaches Emily and Matt have a discussion on #coveredcalls management.
Chart of the Day: 10-year Treasury Yield ($TNX)
Rates have gone parabolic. Go hug a bondholder.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show Replay
If you missed last night’s episode where Coaches Greg & Tyler discussed Bear put management or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
Trade Masters 7:00 PM EST
Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.
Trading Justice 495: What Bottoms First
Should investors panic or be looking for opportunities in the coming months? Listen to another great episode of the Trading Justice podcast.
Listen to the episode in the player below.
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