Has The Great Shaking Of The Financial Markets Finally Begun?
Scoop Publisher Francesco Abbruzzino
A whole host of prominent voices have been warning that volatility and chaos would be returning to Wall Street, and that is precisely what has happened. But is this just a temporary blip, or has the great shaking of the financial markets finally begun? Many stock market investors are very much hoping for the former, because the pain is already becoming quite severe. The Nasdaq has fallen more than 5 percent this week, and it is headed for its second consecutive weekly loss. But the bond market has actually been making even bigger news. On Thursday, the yield on 10-year U.S. Treasuries actually exceeded 1.6% at one point, and that was the highest level that we have seen in quite a long time. Some pundits are calling what just took place a “flash crash”, but it certainly appears that yields could move even higher in the days ahead.
Throughout the COVID pandemic, stock prices have just gone higher and higher, but everyone knew that the party would end eventually.
Have we now reached that point? The numbers tell us that Thursday was the single worst day for stocks so far in 2021…
The Dow Jones Industrial Average dropped 559.85 points, or 1.8%, to 31,402.01, slipping from a record high. The S&P 500 lost 2.5% to 3,829.34 in its worst day since Jan. 27. The tech-heavy Nasdaq Composite slid 3.5% to 13,119.43, posting its biggest sell-off since Oct. 28. Alphabet, Facebook, and Apple all fell more than 3%, while Tesla dropped 8.1%. Microsoft shed 2%.
We are being told that the biggest reason why stocks were falling so much was because of “a full on rout in the bond market”…
It’s “just a full on rout in the bond market. So that filters into everything else,” said Evercore ISI strategist Dennis DeBusschere. “It looks like we just had a flash move in bonds. With a puke move that drove [10-year] yields to 1.6%… We just have to wait for some form of equilibrium in bonds.”
Considering how much our money supply has been rising, there was simply no way that bond yields could stay where they were. It was just a matter of time before inflation fears scared investors, and finally on Thursday the rush for the exits became a stampede…
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