Black Friday?! Global markets see a sell-off in both stocks and bonds, while the US dollar stages a comeback. Gold falling below this level could signal a sharp decline...

In the last day of February Trading Day, Friday Financial Markets experienced sharp fluctuations: Risk assets were massively sold off, the stock market retreated sharply, and European stocks fell across the board, Crude oil Prices plummeted, Gold Continued to fall, briefly falling below 1760, analysts warned that breaking this level could bring an extremely bearish outlook! At this time, US dollar The trend is becoming increasingly firm, once breaking through the 90.50 level. Behind this wave of market fluctuations, the most damaging factor is undoubtedly the continuously rising US Treasury yield - the market is worried that a sharp drop in the bond market may trigger the low-price selling of other assets.

During European trading on Friday (February 26), the decline in spot gold slowed, but the situation remains worrying, Gold price Currently hovering around $1765, having previously fallen below $1760, hitting a one-week low of $1755.

This week, gold may fall for the second consecutive week and second month, as improved economic prospects and inflation concerns push up US Treasury yields.

Yesterday, gold prices fell 1.9%, falling below the 1800 mark, hitting a low of around 1765, as benchmark US Treasury yields hit their highest level since the start of the pandemic, boosting the US dollar.

"As the market anticipates the reopening of developed market economies and rising inflation expectations, this has pushed up yields and suppressed gold prices," OANDA Senior market analyst Jeffrey Halley said. "The overall situation looks bad, and if yields rise again, gold is now at risk of falling," Halley said.

Rising inflation has boosted gold prices, but it has also pushed up US Treasury yields, which in turn increases the opportunity cost of holding non-interest-bearing assets such as gold.

Phillip Futures said in a report, The Federal Reserve Said it was not worried about rising bond yields, which also weighed on gold prices, with key support for gold remaining at $1,760.

MarketPulse wrote that, by default, a daily or weekly closing price of gold below $1760 would be an extremely bearish technical trend. Breaking this level could lead to further declines in gold prices next week to the 61.80% Fibonacci level of $1689.00, but concerns that in a potential surrender trading scenario, the decline could extend to a low of $1600.

The yield on the 10-year US Treasury note fell in early trading on Friday, but remained above the 1.4% mark, after surging to 1.6% the previous trading day.

At 3:30 AM Eastern Time, the benchmark 10-year US Treasury yield fell to 1.489%, but is still up 40 basis points this month, the most since 2016. The 30-year US Treasury yield fell to 2.276%. Yields move inversely to prices.

Yesterday, the yield on the 10-year US Treasury note rose 11.9 basis points (bp) to 1.5078%, hitting a high of 1.614%, the highest in a year, up more than 0.5 percentage points from the end of January. This indicator Interest rate Has exceeded S&P 500 Index's expected dividend yield of 1.48%, which could make stocks look relatively unattractive compared to safer US Treasuries.

The surge in yields has unsettled Investors And put pressure on the stock market, with the Nasdaq suffering its biggest one-day drop since last October.

The surge in the 10-year Treasury yield, which serves as a benchmark for mortgage rates and auto loans, is driven by expectations of improved economic conditions with the rollout of the coronavirus Vaccine And concerns about rising inflation.

The US House of Representatives will approve a $1.9 trillion Covid-19 relief spending plan on Friday, boosting expectations for economic recovery.

The market is hedging against the risk of the Fed raising interest rates prematurely, even though Fed officials assured this week that any action is still a long way off.

Fed Chairman Powell reiterated on Wednesday that the Fed will not tighten policy until the economy improves. The European Central Bank Said this week that it is closely monitoring the rise in yields.

"This is a global trend," said Vassili Serebriakov, a foreign exchange strategist at UBS in New York, Foreign exchange Strategist Vassili Serebriakov said, "The rise in Treasury yields reflects expectations of a strong post-pandemic economic rebound."

Federal funds futures are now almost fully priced for a rate hike to 0.25% in January 2023, while Eurodollar futures are pricing in a rate hike in June 2022.

Strategists at Wells Fargo said in a report on Thursday that they believe "the Fed will have to try to verbally dampen the increased likelihood of near-term rate increases."

"The bond market has entered crisis mode," said a team of analysts at Societe Generale, citing intraday swings of 25 basis points in Treasury yields. "If the market fails to stabilize, central banks may have to intervene, as rapid interest rate fluctuations could disrupt the financial environment. As the medium-term trend is clearly upward for interest rates, there is no reason to catch a falling knife."

Even the idea that ultra-loose monetary policy will eventually end has sent chills through global stock markets. Global stock markets have repeatedly hit record highs for some time, pushing up valuations.

Peter Tuz, president of Chase Investment Counsel, said: "It's all about yields. At 1.5%, Treasury yields are comparable to the dividend yield of the S&P 500. And 10-year Treasuries have no capital risk; you get your principal back. Suddenly, it starts competing with stocks."

“The stock market has hit record highs several times this year, which is expensive by historical standards,” Tuz said. “We're prepared to sell.”

While both stocks and bonds have been hammered, the US dollar has remained strong. The dollar index strengthened in European trading, breaking through the key 90.50 level, putting pressure on most non-US currencies, including the Australian dollar and the New Zealand dollar which fell more than 1%.

Stephen Innes, AXI's chief global market strategist, commented that the rise in bond yields this week is global, and expects this situation to continue to be led by the US market, especially as a US fiscal stimulus package is likely to be finalized in the coming weeks, which is expected to support the dollar.

“The market is increasingly confident in the strength of the global economy in the second half of the year, which also suggests that the market is increasingly skeptical about central banks' ability to keep their promises to maintain interest rates unchanged,” said Ray Attrill, head of foreign exchange strategy at National Australia Bank (NAB). “Falling bond prices spooked the stock market, triggering traditional safe-haven support for the dollar.”