The plunge in the stock market in the US that has accompanied the recent ratcheting up of rate expectations there has been partly blamed on concerns that more aggressive Fed tightening is undermining the outlook for the economy. But the sell-off seems mainly to reflect an accompanying rise in Treasury yields rather than a repricing of risks surrounding growth. The implication is that it may have further to run even if today’s retreat in yields, which seems to have spilled over from action in Gilts tied to Bank of England policy, continues for a bit.
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