US stocks have lowered on Monday as investors stayed cautious about a large stimulus, combined with increasing commodity prices and rising bond yields possibly triggering a rise in inflation, just as the economy is starting to make a comeback from the pandemic.
The 10-year US Treasury note yield is about 1.37%, its highest within a year, having doubled in only six months.
“Short-term bond prices will likely stay under pressure as yields increase in expectation of pandemic re-openings. But the bond market is known to anticipate inflation well beyond what is justified by the actual data,” said John Stoltzfus, Oppenheimer’s chief strategist.
This comes as lawmakers prepare to debate President Biden’s proposed $1.9 trillion plan this week. Along with Fed chairman Jerome Powell delivering his testimony to the Senate.
Also troubling for investors this week is what “Big Short” investor Michael Burry has been saying on twitter.
Over the weekend, the investor said rampant speculation and betting with borrowed money has pushed the market to the brink of collapse.
“Speculative bubbles always end when the gamblers become overloaded with debt,” the investor said, along with a chart displaying the S&P 500 and margin levels skyrocketing in recent months. “The market is on the brink,” Burry said.
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