The past few U.S. Treasury auctions have attracted weak demand, particularly from foreign buyers. That’s dragged bond prices lower and pushed yields higher.
This has upset the tenuous balance the market has achieved over the past few weeks, and we’re beginning to see the likelihood of the market’s worst fears being realized: higher for longer!
That weak demand, coupled with intractable debt and inflation fears, and a relatively tapped-out U.S. consumer means the rise in equity prices is becoming more labored.
The options market tells us that, if we’re long, we’d better be hedged.
Let’s look at some signals of the underlying stress and uncertainty throwing higher equity prices into doubt…