Saturday, 27 February 2021

Nikkei plunges, US Treasury yields soften

Markets fell on Friday.

The Nikkei 225 plunged 4.0 percent, the S&P 500 fell 0.5 percent and the STOXX Europe 600 tumbled 1.6 percent.

US Treasury yields softened on Friday but investors remained jittery.

“Investors are actually looking at the pace at which yields drop and the current speed is quite concerning for equity markets,” said Roland Kaloyan, a strategist at SocGen.

“If the market begins to believe that the Fed has somehow lost control of where the bond market is going, all that idea of a taper tantrum will show up,” said Art Cashin, director of floor operations at UBS.

In the meantime, Quincy Krosby, Prudential Financial’s chief market strategist, noted that “credit spreads remained contained”.

Indeed, some analysts appeared sanguine.

“Yields are rising because investors are optimistic,” said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management.

Keith Temperton, an equity sales trader at Forte Securities, said that “the near-to-mid-term outlook for equities seems positive”.

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