May 29, 5:00 pm EST

We’ve talked about the signal the interest rate market is giving: with rates at these levels, the bond market may force the Fed’s hand — forcing a June rate cut.

Still, the slide in the 10-year yield from 2.75 (in March) to 2.20 (the low today) is well overstating the risks in the global economy.  That’s more than 100 basis points off of the highs of just six months ago.  And the high to low of the last five trading days has been almost a full quarter point (23 basis points).  It makes no sense.

Many would assume it’s related due to the trade standstill.  But the IMF has only cut its growth estimate by 3/10ths of a percent from the tariff escalations.  That still projects a 3% growth from the global economy (much better than the average of the past 10-years).

Meanwhile, a U.S. 10-year and 2.20%, and German and Japanese yields well in negative territory are pricing in global recession (if not worse).  Is Japan buying U.S. Treasuries, and therefore pushing down global yields?  Maybe.

As we know, the slide in yields has weighed on confidence, and therefore stocks for the month of May.  But today, we ran into a huge technical level in the S&P 500 — the 200-day moving average.  And we had a big bounce.  I suspect we’ve seen the bottom of this move in stocks and yields.  We shall see.