Trader Alert: Stock Prices Could Come Down Very Fast And Furious – It’s All About Interest Rates, And It Keeps Moving Higher

Monday, July 8, 2013
By Paul Martin

Investmentwatchblog.com
July 8th, 2013

Bond Yields Creep Closer to the Pain Threshold

The scale of the sell-off in U.S. government bonds has taken market watchers by surprise and yields are now fast approaching a “pain threshold” that could make the Federal Reserve think twice about unwinding its monetary stimulus too soon, analysts say.

Yields on benchmark 10-year U.S. Treasurys soared after Friday’s stronger-than-expected U.S. non-farm payrolls data heightened fears among bond investors that an unwinding of the Fed’s monetary stimulus could come sooner rather than later.

(Read More: One Eye on Earnings, the Other on Bonds)

“I think 3 percent is the key threshold, but if you’d asked me a few weeks ago, I would have said 2.5 percent – it keeps moving higher and yet there doesn’t seem to be an imminent impact on the U.S. economy,” Frederic Neumann, co-head of Asian Economics Research at HSBC Bank told CNBC Asia’s “Squawk Box.”

“But 3 percent is likely to be, not just a material threshold, but a psychological line in the sand for [Fed Chairman Ben] Bernanke at the moment,” he added.

http://www.cnbc.com/id/100868758

The Rest…HERE

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