It a historic pattern 10 year up stocks down!
LONDON (Reuters) – World stocks slipped on Monday ahead of a blizzard of earnings from the world’s biggest firms and as wary investors watched U.S. bond yields approach peaks that have triggered market spasms in the past. The yield on 10-year U.S. Treasuries US10YT=RR hit its highest level since January 2014 at 2.99 percent, pushing the gap – or spread – to German bonds to the widest in 29 years and the dollar .DXY higher in the process. Traders were also getting a global round of economic surveys that should show in the coming days if economic softness in the first quarter was just a passing phase linked to wintery weather and the Lunar New Year holidays in Asia. Readings from Japan, France and Germany were all relatively reassuring. Japan’s PMI data firmed as output and domestic demand picked up, France got help from its services sector, while Germany came in above forecast despite weaker new orders numbers. “It’s a good reading, it’s still encouraging,” said Chris Williamson, chief business economist at IHS Markit, of the combined euro zone numbers, which he said pointed to quarterly GDP growth of 0.6 percent. More than 180 companies in the S&P 500 are due to report results this week, including Amazon, Alphabet, Facebook, Microsoft, Boeing and Chevron. Of particular concern for U.S. analysts will be executives’ views about their exposure to China, amid the recent worries about a trade war. Back in commodity markets, the spike in oil has driven up both market expectations of future inflation USIL5YF5Y=R and long-term bond yields.
Yields on 10-year Treasuries US10YT=RR are at the highest now since early 2014 and again threatening the hugely important 3 percent bulwark.
Dealers cited widening yield differentials for the dollar’s broad rally. The gap with German bonds has touched the widest in almost three decades. On a spot basis shorter-term U.S. 2-year yields are testing 2.5 percent US2YT=RR, which is the highest since 2008.