EDITOR'S NOTE
Just when it looked like a distant possibility, the U.S. and China have agreed to roll back tariffs.
Investors scrambled out of bonds, sending yields higher, and bought stocks, pushing indexes to records. Gold, a traditional hedge against falling interest rates, dropped.
"The last 24 hours have seen a bit of whiplash in the U.S./China trade drama," noted Tom Essaye, founder of The Sevens Report, in a note to clients.
The yield on the 10-year Treasury spiked 15 basis points at one point to 1.96%. It was the biggest increase since the 20 basis points gained the day after President Trump was elected, writes CNBC's Tom Franck.  The rise in bond yields is a signal that recession fears have been overblown, writes CNBC's Patti Domm.
There was lot of hand-wringing this summer over what has been a traditional recession indicator known as the inverted yield curve. Now some analysts are coming up with alternate explanations for this phenomenon in which long-term bonds yield less than short-term bonds.
"One way to interpret the flattened or inverted yield curve is it's a potential indicator of a monetary policy error," said Jon Hill, senior rate strategist at BMO. "The concern about the manufacturing slowdown, the global synchronized recession seems to have been over blown."
In other words, the Federal Reserve went too far raising interest rates, and it has since corrected its error with three rate cuts. Additionally, fears about a recession have subsided, and with Thursday's announcement, the uncertainty around tariffs is fading away.
Fundstrat Global Advisors analyst Tom Lee predicts merry days for stock investors for the rest of the year. In a note to clients, he wrote, "We are in the final eight weeks of 2019, and roughly the start of the Santa Claus rally."
It's not even Thanksgiving, but stock investors are hanging Christmas lights.
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Kamis, 07 November 2019
Bond yields surge | Santa Claus here already? | Warren worries
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