Stocks are weathering the latest bouts of increasing trade war fears, but the bond market is pointing to more trouble ahead.
The S&P 500 is up 1% since a massive sell-off to start last week. The broad index also remains about 3.8% from an intraday record reached on May 1. Futures pointed to more gains on Tuesday.
Bond yields, however, have not been as resilient. The benchmark 10-year Treasury yield is trading at 2.4%, about 40 basis points below its 2019 high and within 10 basis points of its year-to-date low. Yields move inversely to prices.
Bonds are largely seen as a safer investment relative to stocks since they typically are not as volatile. Hence, money usually flows into bonds when investors see downside economic or political risks on the horizon.
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