Yes, higher interest rates are usually the precursor to a market downturn , the one thing that market bulls do not like. And in the current environment so preconditioned to lower rates for longer, any threat to rate stability is certain to contribute to market edginess. I think the market reacted the way it did due to two primary reason, firstly the rate of change of the 10 year yield was unexpected fast on Thursday i.e the market is more worried about the pace of change as opposed to the rate itself which is still historically rather low and secondly, we have had a market rising unabatedly and this was a correction it had to have to sustain going higher, so the rising yield became a perfect excuse for profit taking.
10yr yield has since dropped from 1.6pc high to 1.43 pc now and so we see the market calm returning. But over the past 12 hours, the yield is still rather volatile and could still be rising after a pause.
As I did say, market crash happening in such close proximity to an earlier one is rare, but it didn't need a market crash to see exuberance dissipate. I should think however that given the level at which equities are at, coupled with extreme exuberance, that risk-reward is becoming less compelling. The Biden administration's policies are always geared towards Main St rather than Wall St so it is not surprising that forthcoming tax policies introduced would not be market accommodative or friendly.
A market crash or poor performance does not necessarily jeopardise the chances of the party in power , if that was the case, Trump's loss would have been attributable to the recent crash.
Trump presumptive run for 2024 is just a teaser to collect more $$ from his deluded base...he may be in a lot of financial and legal trouble that would prevent him to run but he badly needs as much money as he can get his hands on ...so the con must continue , after $200-300m collected for legal campaign on which he barely spent now seeking more money from the public for his 2024 run lol (wake up fools!)..but thats another conversation altogether I dont intend to get into. Trump is passe , yet people cannot get over it lol.
