The Telegraph reports that Japanese investors are bailing on US treasuries to invest in the Japanese stock market. This has resulted the increase in the 10 yr Tbill to over 5%.
Michael Taylor, senior economist at Lombard Street Research thinks this year’s sudden rise in 10-year yields risks tipping the US economy into a downturn. He says,”This could be the catalyst for a sharp correction in property prices and wean consumers off their credit binge”.
JP Morgan Chase is forecasting a 13% fall in America’s S&P 500 stock index, and 12% fall in the FTSE 100. “Our big concern is the combination of rising bond yields, sustained high energy prices and weakness in US housing,” said Abhijit Chakrabortti, the global equity chief.