Since June 12th thru June 25th the Dow has lost 1,200 points due to tariffs, but the 10 Year Treasury yield only dropped by 6 bps. Normally when we see this big of a sell-off in the stock market bond yields will drop by 15 bps or more. But, this hasn’t happened. Why?

First, I believe investors realize this sell-off in stocks is short lived. Second, with the Fed raising short-term rates, there isn’t much room for long-term rates to drop. Third, I think this is a sign that Rates in The 4’s are about to be history. Especially since the Fed’s next round of Quantitative Tightening starts July 1st in which they will limit their purchases of Treasuries and mortgage bonds, thus causing demand for these securities to drop while supply is increasing. Thus, rates or yields will have to increase