U.S. Stock Market Rally Threatened by Rising Treasury Yields

investing.com:

This week will feature a ton of economic data that will likely reveal that the job market remains strong and the economy remains robust. Initial jobless claims have consistently decreased in the past few weeks, and the Indeed job openings have increased in July.

Additionally, the 2Q GDP came in stronger than expected. This all points to an economy that remains robust and an environment likely to see rates push higher from here.

Again, as I have talked about for some time, the equity market appears to be underestimating interest rate risk as the equity risk premium between stocks and bonds moves to levels not seen in many years.

But first, one big critical piece of data that will come on Monday at 2 PM ET will be the Senior loan officer survey. This will give investors a sense of whether credit conditions are tightening and whether or not banks are pulling back on lending.

At least based on data that is reported weekly commercial and industrial loans and leases have only seen a modest pull before and remain at historically high levels.

On Tuesday, we will get the JOLTS data and the ISM manufacturing index, while on Wednesday will be the ADP job report; on Thursday, initial jobless claims, unit labor cost, and productivity. Finally, on Friday will be the job report, with expectations for 200k new jobs to be created in June, along with an unemployment rate of 3.6%, unchanged versus last month.

Financial conditions have fallen dramatically since mid-March, so it is no surprise that economic data has primarily come in better than expected—the Bloomberg economic surprise index has risen significantly since the start of April.

It is no wonder why rates on the long end of the curve are pushing higher, threatening to break out,