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Breaking Point
I've hinted multiple times over the past several weeks at a possible breaking point for equities vis-à-vis the ongoing, reals-led bond selloff and particularly the bear steepener. We might've reached that breaking point on Tuesday.
Stocks were meaningfully lower into the US afternoon, and the proximate cause was another sharp selloff at the US long-end. It was quite ugly, with yields higher by 10-15bps from the seven-year sector on out.
I assiduously avoid the rumor mill, and I try to shield
The practical weakness of yield curve inversion as a recession indicator is that the lag from the former to the latter is very variable and often long. Yield curve de-inversion as an indicator does not, historically, share the same weakness.