It’s a holiday-shortened week, and trading activity is generally subdued. But not this year! In the overnight session, the offshore Chinese yuan fell to its lowest level ever against the dollar. Sharp declines in the yuan were key drivers of market turmoil last summer and this January/February, though they haven’t been this fall. Meanwhile, U.S. bonds took another beating this morning along with the Japanese yen. That drove the yield on the 2-year Treasury Note to 1.11%, its highest going all the way back to April 2010. The 5-year yield was recently up 3 basis points to 1.81%. If it moves just a bit further, it will break out of a trading range that dates back years, and it will hit its highest mark since early-2011, as you can see in this chart. Hope you refinanced your mortgage already, not to mention dumped your REIT and home building shares!
