CNBC puts an interesting spin on the stock market sell-off and reversal in almost all commodities today, blaming the SEC insider trading probe. We have a different view, believing it was the historic rise in long-term rates.
Today’s 23 bps (at the time of writing) increase in the 10-year Treasury rate was historic. There have been only 62 days since 1962 where the 10-year rate has increased by 23 basis points.
On a percentage basis — today’s 23 bps change over yesterday’s base rate of 2.94% — the 10-year rate was up 7.82 percent. There have only been 2 days since 1962 where the 10-year rate has moved 7.82 percent — January 2, 2009 and September 19, 2008. Note, all three days, including today, were off historically low base rates with 2 percent handles.
What is the rate spike signaling? Growth revision? Change in inflation expectations? Credit concerns over budget and tax deal? Technicals? Noise? All of the above? Hard to decipher. Keep it on your radar!