S&P500 Intermarket: investors run for exit as 10-yr yield fades Trump trade spike

Trump’s victory in November 2016 boosted the reflation story set in motion by the surge in the Chinese PPI. 

Consequently, the bond yields spiked in line with the jump in the inflation expectations. The stock markets followed suit as well.  Thus, the inverse relationship between the bond yields and stocks was squashed. 

Trump trade fade

The 10-yr yield fell to 2.165%; the lowest level since early November. Given the positive correlation between the stocks and yields, it could be said the S&P500 is now tracking the yields lower. 

The index may continue to surrender Trump Trade gains, unless the earnings surprise on the positive side. 

The continuation of the losses in the index could also keep the Yen well bid, however, came cannot be said about gold, given the metal could feel the heat of the pullback in the inflation expectations.