Stocks Rally as Treasury Yields Retreat, But Investors Remain Cautious amid Economic Uncertainty

Stocks rallied Wednesday as Treasury yields backed off, a brief break from the blistering pace of rate hikes.

The bond market is testing if the economy can handle higher rates, resembling late 2018 and the Global Financial Crisis.

Bear steepeners signal economic slowdown; if rates rise amid slowing growth it's bad for risk assets.

Hot or cold jobs data Friday could further spook stocks and rates if growth is too fast or slow.

Investors should steer clear of risk assets until capitulation, then bonds become attractive again.