Higher yields is the key theme in trading this week and there's little to stop 10-year Treasury yields in its path towards the November and December 2019 highs around 1.97% and more easily said the 2.00% mark.
While that is the big thing that is happening, the implications for broader markets are perhaps the more interesting thing that has to be looked at right now. And the most notable one is the impact on equities.
Tech stocks have been hit hard by the prospect of higher yields but I would argue that it also comes at a convenient timing considering how the market has been rather nonchalant about rate hikes and prices have ignored valuations for the longest of time.
In particular, the Nasdaq chart worries me right now so I'd keep a watchful eye on that. The break below the 200-day moving average could lead to a much uglier drop and that will surely lead to broader tones of risk aversion.
Looking ahead, that will remain a major focus as the week plays out with the inflation data today not really being too impactful.
0700 GMT - Germany December final CPI figures
0700 GMT - UK December CPI figures
0900 GMT - Eurozone October current account balance
1000 GMT - Eurozone November construction output
1200 GMT - US MBA mortgage applications w.e. 14 January
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
