Another bloodbath in stocks as belly burnout hits bonds
Closing changes in US equities:
- S&P 500 down 92 points to 3833 (-2.3%)
- Nasdaq -3.3%
- DJIA -1.6%
- Russell 2000 -3.8%
The bond market is a mess:
- 2s +5 bps to 0.17%
- 5s +22 bps to 0.82%
- 10s +15 bps to 1.53%
- 30s +6 bps to 2.29%
There are a multitude of ways to spin this but this is a market that suddenly wants to reassurances from the Fed that they won't let yields run too far too fast. There's also very good argument that convexity hedging in the mortgage market combined with dealer selling after the auction is responsible for a good chunk of this move.
The good news is that the S&P 500 and Nasdaq both closed above Tuesday's low. The bad news is that tomorrow is the PCE report and if inflation is high, those levels aren't likely to hold.