US 10y T-Note and US stock market

1. Fed implied 4 times rises in Federal Fund Rate

Yield of US 10y T-Note had been stronger, and this leads to yield flattening, making 2s10s 35bp level.

The main reason is risk aversion from increasing volatility in US stock market.

Fluctating US indices in this week is giving impetus to the participants to avoid volatility.

2. Volatility which is coming from concerning over trade war between US and the rest of the world would be intensified

Everyone thinks recent volatility is being based on trade war between US and the rest of the world.

There isn't a sign about relieving the war in near future.

China took retaliatory measures to $50bn scale of tariffs of US, and the US launched another retaliation about the measures with $200bn scale of tariffs targeting Chinense imports, mostly industrial materials.

Allies of the US also surrender to the measures that easily.

EU and Canada already are taking process or launching retaliations for the levies.

Even Mexico will resist to the levies strongly, considering high-probability of election of the-extreme-left president.

The only one, which will surrender to the raid, will be Japanese, whose main companies had been preparing continuously to the measures since 1990s.

Government don't stop the raid in near future, considering president election in 2020, and recognition of the high-officials who are saying ultra-expanding economic power will bumper effect of the retaliations from China.

Some players think this war will leads to uncertainty in real economy like Brexit did to economy of UK.

Interviews from top executives of the biggest companies keep appearing as "We can't take investment on new plants, infrastructure and expansion of business... because of the uncertainity!"

And performances of players wihch are taking aggresive investment in stock market are lagging behind those of their rivals who are increasing dividend rather than investment : like Exxon Mobile vs the other oil majors.

This is also showing uncertainties which market participants got

3. Tech stocks couldn't be safe assets.

Some journalists and research analysts have been saying that Tech companies which have lower exposure to foreign countries are recognized as safe assets in the markets.

Just let see common sense in industrial world.

Everyone, who buys a PER 300 stock, doesn't expect stable cash flow from the companies.

Irraionalities of the participants are just temporary, and you have to prepare mostly for the Tech companies which couldn't generate enough profits like Netflix or Amazon, if you are supposed to collapse of stock market.

I don't think there would be the strongest plunge in near four-eight weeks, but volatility of NASDAQ would be bigger than other two indices if recent volatility will keep going.

4. Re-reaching to 3% yield of US 10y will take more time, I guess.

I think that the volatility will keep going at least during this week, and lead to strong demand to US 10y T-Note.

On the other hand, there could be additional upside in long-term bond market, and 2.8% yield of US 10y T-Note would be possible in near future.