The S&P 500 has extended its decline to 0.8% after rising by 1.8% earlier. The trigger on the turnaround today was strong economic data and a rout in bonds that kicked off in the UK and extended on a terrible Treasury auction.
US 10-year yields are now up 9.8 bps to 3.98%. Obviously the 4% level looms.
This looks more and more like something is breaking and someone getting liquidated but there are no real rumors about that doing the rounds.
Alternatives:
- Central banks and reserve managers selling bonds to defend currencies, especially in emerging markets
- Portfolio redemptions from levered funds related to quarter end
If the latter is a factor, then it should relent after the turn of the calendar into October, or even just before that.
Stocks can't turn until bonds at least stabilize.
