Fixed Income Market Still Flashing Warning Signs

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.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza