US: 10-year yields consolidate as stocks were under pressure - BBH

Analysts at BBH explain that falling stocks and some inflation concerns (which to the extent they are linked to tariffs on steel and aluminum) seem misplaced or exaggerated as Powell's testimony saw the US 10-year yield consolidate below the recent high near 2.95%. 

Key Quotes

“On the downside, the yield did briefly slip below 2.80%, but the generic yield was virtually unchanged on the week at 2.86%, and only with the help of a five basis point increase before the weekend.  The March futures contract rose through the resistance we identified at 121-00, but prices reversed and look poised to retest the lower end of the range near  120-00.  The market may be hesitant about pushing it much lower ahead of the US employment data at the end of next week.”

“The S&P 500 lost nearly 2.5% last week, but it started the week gapping higher.  It filled the gap as part of Turnaround Tuesday's reversal.  Stocks were under pressure prior to the tariff announcement.  The lows for the week were recorded on Friday (~2647.3) before a smart rebound of nearly 2% and returned to the 20-day moving average (~2697.2).  The 38.2% retracement of the week's drop is found just above there at 2701.5.  The S&P 500 held above the 61.8% retracement of the bounce from the mid-February swoon.  If it were to go below there (~2630), the medium term technical outlook would deteriorate.  Otherwise, we think recovery from the last month's sell-off continues.”