Equities are having a rough day and that would normally lead to some buying in bonds. Instead, we’re seeing a rout.US 10-year yields are up 17 basis points, completely wiping out yesterdays drop and much more. This will be the first close above 3%, in all likelihood.Moreover, 2-year yields are up 11 bps to 2.72%. That’s still 10 bps from yesterday’s high but worth watching closely whenever the puke in stock markets stops. On that front, the Nasdaq continues to hit new lows, down 4.8% in the worst day since Jan 24 and bordering on the worst day since Sept 2020.If the Fed loses control of this market and its credibility in fighting inflation then we’re in for some bad times.Tomorrow is non-farm payrolls Friday and if we see something like strong jobs grains and high wages then the FOMC is in real tough spot. Their hope has to be that both are on the softer side of expectations. The problem is, that could stoke growth slowdown talk and that will heighten the focus on the difficulty in achieving a soft landing.Given all that, you can see why there’s a move to deleverage.
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