Thread by @KelvinSCWong

Good morning Asia! A sea of red for US stock market overnight. Even the outperforming cyclical/value stocks were not spared as traders took on a “sell everything” mindset due to a strong up move in long dated US Treasury yields..

Despite Fed Powell “assurance” that tapering of bond buying is likely not happening in the near to mid term.
Scorecard:
SP 500 $SPX -2.45%(3829)
Nasdaq 100 $NDX -3.56%(12828)
Dow Jones $INDU -1.75%(31402)
Russell 2000 $RUT -3.69%(2200)

As per highlighted earlier to watch the 1.38% major resistance on the US 10 year Treasury yield, it broke above 1.38% with a daily close at 1.53%, +15 bps, steepest single day gain since 4 Aug 2020.

This rate of increase in US 10 year Treasury yield $TNX seems has triggered a negative feedback loop in all stocks (Tech, cyclical/value, commodities relates, defensive/REITs) + the $TNX close of 1.53% has surpassed the S&P 500 dividend yield of 1.51%

A clear picture is painted in the performance of the S&P Sectors where all 11 sectors recorded losses of -1% & more.

The medium term uptrend has been damaged on the Nasdaq 100 with a daily close of 13190. Even though, SP 500, Nikkei 225, Hang Seng Index, German DAX are still holding above their respective medium term pivotal supports, their medium term uptrend are at risk of breaking down ..

Hence, a potential multi week corrective decline is unfolding for global stocks given the negative feedback loop triggered by surging long dated sovereign bond yields

Performances seen in the S&P Sectors painted a dismal picture. All 11 sectors recorded losses of -1% & more.

The medium term uptrend has been damaged on the Nasdaq 100 with a daily close of 13190. Even though, SP 500, Nikkei 225, Hang Seng Index, German DAX are still holding above their respective medium term pivotal supports, their medium term uptrend are at risk of breaking down ..

Hence, a potential multi week corrective decline is unfolding for global stocks given the negative feedback loop triggered by surging long dated sovereign bond yields

On comforting observation for risk assets is the #USD movement. Synchronised sell off in all 11 S&P Sectors tends to be accompanied by a surge in USD Dollar Index $DXY. But such move did not materialise..

The $DXY inched lower marginally -0.05% (90.13) at the close of yesterday US session, below its short -term resistance of 90.44. Similar movement was also seen in $USDCNH where recent bounce from 15 Feb low of 6.4008 below 6.5110 range resistance in place since 18 Jan

Thus, the current jigsaw puzzle seems to indicate that the major uptrend phase of global stocks since Mar 2020 remains intact amid a potential multi-week corrective decline unfolding.