By Simon White, Bloomberg Markets Live reporter and strategist
The recent rise in yields and the steepening of the curve sets the stage for higher rate volatility, lower Treasury liquidity, and more common equity-vol flare-ups and stock declines.
The seeds of the next war are sown in the last peace, said some cheery soul once. It’s not dissimilar in markets: it’s during expansions that the most egregious excesses are built up, laying traps for when the cycle takes a turn for the worse. Today we are seeing those excesses begin to unravel, uncorking several years of repressed volatility.
