US 10-year Treasuries down to 2.83%
Rumors of the death of the bond bull market might have been premature.
US 10-year yields are lower for the third day in a row. They are down 3 basis points to the lowest since February 14.
It's not a surprise to see some consolidation ahead of 3%, which is a major level psychologically and technically. Yields have climbed nearly a full percentage point since September and 60 bps since the start of the year.
The tough question for global markets is: What happens after 3%?
What will be the effects on the FX and stock market? It looked like we would get an answer but now we're going to have to wait.
The downside of that is that 3% becomes an even bigger line in the sand. It's like Game of Thrones, where we have to wait another year for the final season. It adds to the buildup and makes expectations even higher.
In most cases, that's a bad thing because when it arrives there is disappointment.
Along the same lines, Goldman Sachs is out with a note warning that the S&P 500 will fall 25% if the 10-year yield hits 4.50%. So the question is: Between 3% and 4.5%, where does the selling start?