Bond Yields Spike, Market Looks for Capitulation

• Bond Yields Spike, Market Looks for Capitulation
  by Patti Domm, http://www.cnbc.com/  
  Treasury yields ripped higher Monday, putting pressure on stocks and signaling a possible sea change in the global rate environment.
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  The move in yields on the 10-year note and 30-year bond was surprisingly rapid and violent, and strategists were hard pressed to pinpoint a specific reason for the shift. Markets will now focus on rates Tuesday, to see if Monday’s high yields are just the starting point for a new trading range.
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  Traders in the futures pit in Chicago characterized the move as being similar to a “global margin call,” where each tick higher in yield into new territory forces more repositioning. The shift higher in rates then becomes self-fulfilling until there is a capitulative spike.
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  “This is starting to become a bad omen. This is not good. There’s enough leverage out there in different forms, where if this is the end of the ‘easy money, low long-term rates’ story and the Fed is not going to be able to hike, the long-term interest rates market is going to do the tightening for the Fed, and this will be bad for most financial assets,” said George Goncalves, head of rate strategy at Nomura.
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