Rick Santelli on Treasury Yield Volatility and Stock Market Influence

Treasury Market Volatility

• 🎢 The Treasury market has experienced significant volatility this week, with yields moving up and down.
• 📈 Despite the fluctuations, the 10-year Treasury yield is only up about four basis points on the week, and the 2-year is also up around four basis points.

Stock Market's Impact on Yields

• 📊 Stocks are currently the primary driver of Treasury yield movements today.
• 🔗 There is a strong correlation observed between S&P futures and 10-year note yields, as they trade nearly 24 hours a day.
• 📉 When equity markets become volatile and decline, Treasury yields tend to follow them down.
• 📈 Conversely, when equity markets recover, Treasury yields tend to move back up.

European Bond Market Influences

• 🌍 European bond markets, specifically UK gilt yields, are at six-week highs, and German bund yields are at one-month highs.
• 🇪🇺 This is attributed to fiscal issues in Europe, such as the UK's 20 billion pound fiscal budget hole and France's similar scenario, leading to increased debt issuance.
• ⚠️ There is a persistent market sentiment that Treasury yields will remain stubbornly high due to these factors and ongoing issuance.