It is all about interest rates these days and nothing else matters. Benchmark interest rates hikes in Asia and rising yields elsewhere are weighing on the markets. Obviously the underlying factors for yields rise should be taken into account. While Asia and Latin America performed, well, better then developed world, and interest rates increase is the proper policy response to inflation, growth of monetary base, etc, the rest of the world is simply experiencing higher interest rates through bond yields. There is nothing new in rising yields in peripheral Europe, but French yields are a concern, yet it is more likely due to relatively better growth.
(for some reason I tend not to like the US, sorry for this) The fact is that US yields are rising as well post QE2 announcement (10y chart is below):
And, according to FED there are not supposed to. Ok, I might admit that it is also a growth story... or another insolvent country story. put everything aside, there is a trend there and the way for it is up. It is also interesting to see that rising yields correspond to stronger dollar (correlation of 10Y with Dollar index is very high):
and ,watching the markets intraday, you can feel that it just knock down a chair under the "risk assets". While it persists, stronger yields will limit a rise in oil, metals and equities.
No charts or technicals today as I am still catching up with the markets.
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