There was plenty if not a boat load of jitteriness in the capital markets this week, and the reason was simple: the 30-year Treasury yield surged to a 19-year high over 5.3.
If there's any reliable indicator of the economy's health, it's the bond market. The bond market is essentially the market for interest rates. It's slow, boring, and often overlooked by most investors and spectators alike, including myself. Fair enough. But when bond yields start moving sharply, everyone eventually pays attention.
When yields rise, high-value growth companies and stocks tend to get hit first. That's exactly what happened this week. The outcry across financial media was loud and clear, and futures markets today pointed sharply lower heading into this morning's trading session.
Then, before Wall Street could fully panic and turn the tables, some relief arrived from Papa Sam.
First, news broke that policymakers from the treasury department and elsewhere were considering measures aimed at easing debt issuance pressures and helping stabilize the bond market. Second, the administration's planned 50% tariff on one of America's largest trading partners and closest allies, Canada, was put on hold until further notice.
Those two developments changed the mood in not time.
Lower pressure on bond yields and a pause on a major trade escalation gave investors exactly what they were looking for: a reason to buy the dips. Futures reversed course, confidence improved, and the markets turned green.
Now you know why Wall Street is smiled today-relief.
Brought to you by your Pal, Mr. Spectator in Chief.
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