Hey all, I’ve recently started learning about the basis trade and how closely markets watch US Treasury yields as a sign of what’s happening under the hood in the financial system.
It made me realize that I should probably be paying more attention to this side of the market, not just stocks. But I’m still wrapping my head around how Treasury yield movements actually impact equities, and what an everyday investor can do with this information.
A few questions I have:
• What are the key drivers behind rising or falling Treasury yields?
• How does the basis trade play into this, and what does it signal about market health?
• Is there any actionable insight a long-term investor can use from watching yields, like adjusting portfolio exposure or risk-on/off decisions regarding equities?
I noticed yields spiked this past week (I think due to hedge funds needing money or falling confidence in the US dollar?), and it made me wonder what I’m missing by not paying attention to this more.
Would love if someone could explain this in a clear way or point me to a good resource.
Thanks!