Why The 2018 Stock Market Corrections Are Different
The comments below are an edited and abridged synopsis of an article by Global Macro Monitor
This year’s two S&P 10% corrections have coincided with a rise in the 10-year Treasury yield. Such a rare event, at least in recent history, has happened only once in the last 20 years, and that was a special case, caused by a massive flight to quality and complications around the Russian Debt Default and LTCM crisis. In general, when stocks fall by 10% there is a flight to quality and yields fall on Treasury securities, but the 10-year Treasury is higher than when the S&P500 peaked in September. It is signaling that there are structural changes taking place in the global capital markets.
