Treasury Yields Are Soaring — Will Stocks Be Affected Soon? (IEF)

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January 19, 2018 6:19am NYSE:IEF

From Tyler Durden: 10Y US Treasury yields just jerked higher, breaking above the crucial 2.63% level — the highest yield since Dec 2016.


10Y is up almost 30bps since the Dec 13th Fed rate hike…

https://www.zerohedge.com/sites/default/files/inline-images/20180118_10Y.png

As we detailed previously, during the Q&A segment of DoubleLine’s Jeffrey Gundlach’s most recent presentation, the bond guru was asked an interesting question, regarding what yield on the 10Y would be high enough to finally pressure stocks into selling off.

For Gundlach the answer came with two significant digits of precision: “if the 10 Year goes to 2.63% stocks will be negative impacted.”

However, he also added that if the 10Y TSY passes 2.63%, it will head well higher, likely pushing toward 3%, and since he expects a 3.25% print on the 10Y in 2018, it is clear why Gundlach is not too keen on stocks.

It’s a little early to say but we do note that bonds and stocks are falling together…

https://www.zerohedge.com/sites/default/files/inline-images/20180118_10Y2_0.png

2.6394% is the high yield from Dec 2016 and so we are within a few ticks of the highest yield since September 2014…

https://www.zerohedge.com/sites/default/files/inline-images/20180118_10Y1.png

The iShares Barclays 7-10 Year Treasury Bond Fund (IEF) was unchanged in premarket trading Friday. Year-to-date, IEF has declined -1.43%, versus a 4.60% rise in the benchmark S&P 500 index during the same period.

IEF currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #6 of 28 ETFs in the Government Bonds ETFs category.


This article is brought to you courtesy of ZeroHedge.


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