Global Stocks Slide, Futures Pressured As Bond Yields Jump To Highest Since June

World stocks started the week in the red Monday as the dollar touched a 7-month high and U. S. and European government bond yields climbed to their highest since June following the Friday speeches by Eric Rosengren and Janet Yellen which hinted the Fed’s next step could be to pursue a steepening of the TSY yield curve the same as the BOJ.
Echoing what we said previously, Ric Spooner, chief market analyst at CMC Markets in Sydney, wrote that “markets are reacting to the possibility that the Fed might join the Bank of Japan in conducting policy to steepen the yield curve. In the Fed’s case, this might amount to running the gauntlet of higher inflation with a very slow pace of monetary tightening.”
According to Reuters, despite the specifics, all the overnight moves came amid signs that inflation is finally starting to wake from its slumber and that top central banks may let inflation “run hot” as Janet Yellen suggested on Friday.
Among the hardest hit treasuries were U. K. gilts, with losses accentuated by the turmoil arising from ongoing concerns about a “Hard Brexit.” As a result, 10-year yields rose to the highest since the Brexit vote, amid speculation the weaker pound is already pushing up prices for consumers. Sterling continued to fall, dropping another 0.2%.

This post was published at Zero Hedge on Oct 17, 2016.