You would think that with the plunge in bond yields this week, equities would’ve been on a tear and entering a strong rally mode. Instead, it has been anything but in the last two days. And only now in European trading are we seeing some tentative signs of stronger gains with regional indices up around 0.5% to 0.9% while S&P 500 futures are up 0.4% at the highs currently.
I would argue that month-end flows could perhaps be offering some counter-argument for stocks to gain. Otherwise, it’s hard to pick at reasons why there hasn’t been a ripping rally just yet. 10-year Treasury yields have fallen some 17 bps on the week already and even taking out a key technical level here.
It’s a bit of a topsy turvy day now with the dollar finding some steadier footing on the session but I wouldn’t be surprised if the greenback turns around and falls sharply in US trading later.
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