Markets fall as concerns shift away from bonds

Markets mostly fell on Friday.

The S&P 500 fell 0.3 percent and the STOXX Europe 600 fell 0.3 percent. However, the Nikkei 225 rose 0.2 percent.

The 10-year US Treasury yield remained at a near seven-year high of 3.1 percent as analysts expressed mixed views about its future direction. TradingAnalysis.com founder Todd Gordon thinks that the bond market breakdown is about to get worse but editor of the Bear Traps Report Larry McDonald thinks that bonds are way oversold.

In any case, Lance James, a senior portfolio manager of US equities at RBC Global Asset Management, said he is not concerned about the bond market’s impact as “the rising yield reflects an improving economy”.

However, James is concerned about tariffs and trade policy. “To me, that’s the biggest risk, and we need to see whether the negotiation process results in fairer policy,” he said.

In Europe, the FTSE MIB Index plunged 1.5 percent as the Italian political situation weighed on markets. Credit-ratings firm DBRS warned on Thursday that the economic proposals from the 5 Star Movement and League coalition that included tax cuts and increased fiscal spending could threaten Italy’s credit rating.