Climbing treasury yields underscore the difficulty for stock markets

The mood in markets is deteriorating at the moment and the Nasdaq is trading back to flat on the session after rising more than 1% earlier.

The bond market is driving the move. US 10-year yields are up 6 basis points on the day to 2.84% after falling as low as 2.73% earlier. The front end is still slightly lower, down 1.8 bps to 3.19% but up from the 3.13% low.

There’s a signal of reflexivity from the Fed here. As risk assets improve, it makes it more likely the Fed will raise rates aggressively. But as rate hikes become more likely, the risk appetite sags.

In the big picture, US 10-year yields haven’t broken down the way it looked like the might at the start of the month and now the modest downtrend may be giving way.