S&P’s $18 Trillion Rally Threatened by Psychology of 5% Yields

 

Equities traders have shrugged off the bond market’s warnings for months, focusing instead on the windfall from President-elect Donald Trump’s promised tax cuts and the seemingly limitless possibilities of artificial intelligence. 

But the risk came into focus last week as Treasury yields climbed toward their ominous milestones and share prices sank in response.

The spillover into the stock market was apparent on Friday, as the S&P 500 tumbled 1.5% for its worst day since mid-December, 

turned negative for 2025, 

and came close to wiping out all the gains from the November euphoria sparked by Trump’s election.

Bloomberg 12 January 2025

https://www.bloomberg.com/news/articles/2025-01-12/s-p-s-18-trillion-rally-threatened-by-psychology-of-5-yields

The “term premium”—the extra yield investors charge on long-term government bonds, over and above that attributable to the changes in the central bank’s policy rate that are already expected. 

The Economist 12 January 2025

https://www.economist.com/finance-and-economics/2025/01/12/why-global-bond-markets-are-convulsing

Tillbaka till Rolfs länktips 12 januari 2025

https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-12-januari-2025.html