Stocks finished the day lower as rates continued to rise. The 10-year Treasury yield reached 5.3% on the day, while the 30-year reached 5.65%. At this point, we are just about 20 bps away from the next resistance area on the 30-year at 5.85%. There isn’t much in the way of resistance between here and there to slow the move higher.
The only major item left on the calendar this week is the jobs report on Friday.
Really, the only conclusion that makes sense when it comes to rising bond yields is that the market is repricing rates globally. Japan, which has long served as the low-rate anchor for the rest of the world, has lifted, and global rates are rising along with it.
The spread between the U.S. 30-year Treasury yield and the 30-year JGB is now just 1.5%, which is actually very low. Historically, that spread has tended to bottom around 1% and peak somewhere between 2.5% and 3%.
What is concerning is where the 30-year JGB sits today. It has been consolidating just below the 4.2% level and has formed what appears to be an ascending triangle. A breakout above 4.2% could have serious reverberations across the global bond market.
In the meantime, there isn’t much else to say. The S&P 500 (SPY) had another really boring day, and it has pretty much been that way since June 2—just a sideways market. Maybe tomorrow things will be more exciting.
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