Real yields drive current jump, not inflation fears, affecting bonds and stocks negatively.🕶️
Furthermore, an important distinction to make on the current yield move is that the jump higher is led by real yields, not breakevens. Put it another way, rather being driven by fears of rising inflation expectations, which can be reversed by factual data prints such as CPI/PCE trending lower, the market is demanding high real interest rates as a higher required return of capital. A higher cost of funding has obvious negative drags on asset prices across the board, and helps to explain why both bonds and stocks have been selling off in tandem over the past month.