That disturbance you might have felt in the force–that’s the high-conviction shift in both stocks and bonds. Whereas both had been defying the consensus (bonds by improving and stocks–to a lesser extent–by failing to ‘always be moving higher’), both fell back into line yesterday. Stocks had already begun that process by putting in steady gains last week, but yesterday’s move was the one that got the momentum indications to switch back to positive.
Bond markets–as represented by 10yr yields below–went from the stronger end of their trend to breaking completely through the weaker end of the trend in a day. Granted it’s a narrow trend, but still!
If rates held here, that’d be fine. The chart above would merely look like a revisiting of the upper range boundary and life would go on. The risk is that the whole sweater will begin to unravel, or at least a sleeve or two.
Technicals don’t predict the future, but if we happen to lose ground again today, it would add to an increasingly compelling case (for further weakness). Keep in mind, any anxiety you’re picking up here is simply an attempt to get ahead of a more disturbing move that hasn’t happened yet. After all, 2 trading sessions ago, we had one of the best days that ended at the best levels in many months.