US 10-year bond yields are the focus of the world when it comes to interest rates and Fridays US Jobs Data showed a clear picture that a shortage of workers and raw materials was causing issues for the governments heavily stimulated economic recovery. However, with massive jobless benefits coming off in the next few months that willing workforce might easily pop higher in the not too distant future. Either way our main focus is the resulting bond yields and its impact on equities, especially on the sector level as rotation continues to dominate 2021.
MM has been calling a few months consolidation by bond yields which continues to unfold nicely, this may have further to go but we feel it’s slowly running out of time and a breakout is looming. Our preferred scenario is the move will potentially fail, especially if it’s on the downside. We are especially keen buyers of dips in yield below 1.5% as the new trend on the upside is the most likely to throw up surprises.
MM feels the next breakout in US bonds can be faded in the coming months
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