morning note/green shoots vs higher interest rates

Asian stocks powered higher overnight, especially in Taiwan which rose
almost 7% after their govt said they will allow China to invest in their
mfr’g co’s. Japan rose about 4% after March IP rose twice what was
expected. The rally spilled over into Europe after some good earnings
reports and UK consumer confidence rose to a one year high. Germany’s
April unemployment rate rose to the highest since Dec ’07 but the # of
unemployed rose less than expected. With the S&P futures following the
rise, global bond markets are trading lower and specifically the 10 yr
bond yield is rising above 3.10%, the highest since Nov 25th. The
question for the US economy and the equity market is at what level does
the rise in yields begin to hurt and snuf out any hope of recovery since
higher interest rates are kryptonite to an overleveraged economy. It
also highlights the risk the FOMC has taken by their decision to pick a
fight with the bond market.


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