Stocks could be swept higher in a Santa rally, but traders are watching out for a potential party pooper.
“Beware of the bond market,” said Mark Luschini, chief investment strategist at Janney Montgomery.
Treasury yields have the potential to act as a trip wire for stocks. When the 10-year edged to 3 percent earlier this year, the stock market was shaken. With the Fed now preparing to slow down its bond-buying, yields have been moving higher again, and better economic news is also a catalyst.
Stronger-than-expected consumer spending, up 0.5 percent in November, and surprisingly good durable goods, up 3.5 percent, helped drive the 10-year yield to 2.987 percent Tuesday, its highest level since Sept. 6, when it hit 3 percent.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.