So much for the stock lever! Though, to be fair to conventional wisdom, falling stock prices definitely did help bond yields move lower this morning. In fact, it was the day’s defining moment (heavy selling stocks at the 9:30am NYSE open accompanied by high volumes and a bit of buying in bonds).
The issue is that the bond market gains paled in comparison to the stock move. Additionally, bond yields refused to break below the recent lows in the mid 2.86% range. Charting the recent action in SP futures vs 10yr yields makes the discrepancy obvious:
Simply put: bonds don’t look like they want to play the trade war panic game as much as stocks–if at all. The risk is that bonds are vulnerable to any potential bounce in stocks as the week progresses.