US 10-year yields extend gain to 1.27%


Quick break

Quick breakĀ 

Who is in charge here? Bonds or stocks?

It’s a big battle today as 10-year Treasury yields break the 1.20% January high and bust out quickly to 1.27%. It’s the same story across the long endĀ  with 30s breaking 2.00% and continuing to 2.07%.

The dollar was the first beneficiary and now equities are slumping. Leading the way are real-estate connected stocks and other rate-sensitive sectors. It all begs the question: is the bond market signaling rate hikes or a ‘return to normal’?

That’s a tough call at this point but any rock in the boat right now seems to send a few queasy bulls overboard.

I don’t think the paradigm changes until 2% in 10s, so long as the pace of the rise in yields is slow (call it 1 bps per day, on average).

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