Via an overnight client note from Barclays on US Treasuries and their relationship to US equities

  • higher US Treasury yields returned as a driver of lower stock prices

(on Tuesday)

  • We think the frequency of sessions like yesterday's, with rising yields and falling stocks, will be limited. For one, we don't think US rates will rise sustainably from here. The falling correlation between yields and stock prices is one indicator that suggests to us that policy is already becoming more constraining and the potential for investors to price a steeper Fed path is limited
  • Further bond selloffs also seem unlikely while data continue to point to slowing global growth. The latest evidence of this came from yesterday's German Q1 GDP release. It added a point to what we already know - Europe slowed meaningfully at the start of the year. Germany ... we don't expect this slowdown to last - domestic demand was a key contributor to the slower GDP growth in Q1, but we expect this component to rebound in Q2 despite concerns around global trade uncertainty