US: Mixed fortunes for 10-year yields and S&P 500 - BBH

The US 10-year yield slipped to 2.30% at the start of last week and without fresh economic data of much importance, the yield finished the week knocking on 2.40% door, notes the analysis team at BBH.  

Key Quotes

“Meanwhile, the US two-year yield continued to climb.  At 1.65%, the yield is the highest since 2008.  The yield curve steepened slightly last week.  The main driver was the implications of the tax reform bills and the apparent recognition that serious fiscal reform will remain elusive.  The sell-off in the December 10-year note futures completed a 61.8% retracement of the bounce since the double low was recorded in late October.  A break of 124-20 would signal a test on that double bottom low at 124-06.  The low for the year was set in March on the generic futures near 123-10.  The daily technical studies underscore the downside risk (higher yields).”  

“The S&P 500 snapped an eight-week advance.  It lost 0.2% last week, a minor pullback, which does not appear to require a large fundamental explanation, though the Senate proposal to delay the corporate tax cut by a year may not have been helpful.  The S&P 500 briefly traded below the 20-day moving average for only the third time since the end of August but has not closed below it once.  The firm closes suggest there may be another push higher in the coming days.  However, the MACDs and Slow Stochastics continue to show a bearish divergence from prices.  We remain cautious.”