Trading Day: Stocks, bonds in delicate dance

Global stocks lost ground on Wednesday as the bond market continued its sell-off, pushing long-dated US yields to 24-year highs. However, a successful 10-year Treasury auction and Federal Reserve minutes helped ease some upward pressure. The article questions how much longer Wall Street can sustain its recent highs while the bond market rout persists.

Fed policymakers showed division in their reasoning for raising rates last month, with some viewing it as a precautionary measure against energy-driven price pressures and others as the first step in addressing demand-driven inflation. This division suggests less certainty in upcoming decisions, potentially leading to more rate hikes.

The increasing US term premium, up 40 basis points in two weeks, has reached a 12-year high and may indicate risk aversion beyond just economic growth expectations.