The recent surge in long-dated US government debt yields has created a warning sign for investors. Thursday’s sharp sell-off pushed 10- and 30-year yields to their highest closing levels in almost seven months, setting up a potential market downturn.
This trend is the result of a bear-steepener trade, where sellers bet on lower yields. Specifically, this involved selling 10-year notes, which has contributed to the rise in yields.
Adam Turnquist, strategist at LPL Financial, believes that while he’s not predicting an end to the bull market, he sees the next buying opportunity as a potential sell-off in stocks. With the yield rise, investors should be cautious and watch for signs of another big selloff in the days or weeks ahead.
Source: https://www.marketwatch.com/story/how-this-treasury-market-dynamic-could-lead-to-the-next-big-leg-lower-in-stocks-2ee66451