Markets Tumble on Surging Yields and Credit Spreads after Hot Inflation Data
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Yields and credit spreads rose sharply following a hotter-than-expected PPI report, putting pressure on stocks and raising concerns about a deeper market pullback.
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The 10-year Treasury yield is approaching the critical 4.35% level. A decisive break above this level could intensify the stock market sell-off.
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The CDX High Yield credit index rose close to 330, nearing important resistance around 350. Further gains in this index could signal more spread widening ahead.
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Stocks have traded in lockstep with the CDX High Yield index, reflecting the key role of high-yield credit in determining equity market direction.
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Adobe stock fell 10% after hours following weak revenue guidance for next quarter, with key support around $505 now in focus. A break below this level could open up a 13% downside gap.