Uddrag fra Zerohedge:
Meanwhile, as the dollars surged, so did Treasury yields, and just over a week after the start of Chinese easing, US 10Y Yields spiked, briefly rising above 3.00%, a level which it turns out, is now considered the “magic number” on Wall Street, above which risk assets start to crumble.
Here, once again, is Bank of America, which reminds us that in the latest Fund Manage Survey, respondents said that 3.5% is the level they will shift from equities to bonds, down from 3.6% a month earlier. So, as BofA’s Michael Hartnett notes, “it should not be a surprise if reallocation starts before yields get to 3.5%. Indeed, as we breached 3% the following asset classes all suggested that the 3-3.5% range would become “painful” if not accompanied by much stronger economic data.”
Case in point, banks, homebuilding stocks, US dollar, EM, yield curve all suggested 3% on the 10-year Treasury yield was the magic number.
And just in case that was not enough, Hartnett also has a secondary “fail safe” EM-stress indicator:
Tremors in the periphery: 3% + rally in US$ has caused EM tremors (ARS, INR) at a time of peak EM debt/equity inflows ($371bn)…EMB <107.50 contagious
This means that once EMB, the JPM Emerging Market Bond ETF, drops to 107.50 – the level it hit right after the Trump election – it will be time to get out of Emerging Dodge.
