From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
There have been some fireworks to kick off the new year. One of the biggest developments in 2022 has to be the US 10-year yield breaking to its highest level in two years.
The direction in which yields resolve from their 2021 consolidation will impact all the major asset classes, including bonds, stocks, and commodities. We’re already seeing procyclical assets catch an aggressive bid as the 10-year flirts with an upside resolution.
For now, the path of least resistance is higher. But we still need to see follow-through and confirmation before we can be comfortable that these new highs are here to stay.
When we look at the international bond market, it’s not just domestic Treasury yields that are on the rise. We’re actually seeing rates make new highs all across the developed world.
This is bullish confirmation of what we’re seeing domestically, as it suggests the current rising rate environment is a global phenomenon and not just a US story.
Let’s check back in on the US 10-year yield along with other benchmark rates in order to illustrate this point. [Read more…]