Watching the Treasury market, the 3% level on the 10-year yield is obviously critical: Breaching that level is technical confirmation that a bond bear market is underway, and psychologically, it throws cold water on investors and traders.
10-year Treasuries are yielding 2.845% as of this writing, with no sign that they’ll go lower anytime soon.
Still, it may take a while to clear that 3% level, but once it’s broken, it’s broken – and the pressure on stocks should grow.
More Treasuries, More Pressure on Stocks, and More Short Opportunities
As the Fed shrinks its balance sheet at an accelerating pace over the next year, it will cause both an increase in Treasury supply and a reduction in the cash available to absorb that supply.
via Money Morning When This Line Crosses 3%, Run for Cover and Get Short