Yesterday was the first back-to-back decline since late March. This was likely due to several factors:
- COVID-19 - Coronavirus cases are soaring across the globe and this is hitting reopening plays. The State Department said it would increase "do not travel" advisories to 80% of the world's countries. Some health experts have also suggested that herd immunity may be off the table and are rather talking about control
- Inflation - Pricing pressures were seen in the market last week, with the biggest monthly rise in the consumer price index since 2012. Consumer giants have said they will have to raise prices because of higher commodity and input costs. The latest to boost price tags are Procter & Gamble and Coca-Cola, which unveiled the increases this week along with their Q1 results. We are likely to see more evidence of this from other CPG companies.
- Yields - The rate on the 10-year Treasury crept up another 2 bps overnight to 1.58% and even touched 1.6% on Monday. Traders will keep an eye on an auction today for $24B of 20-year bonds, as gauge of demand for longer-term government debt. Another $35B auction will be held for 119-day bills. here