10-year Treasury yield tops 3.2%; US stocks dip

US stocks fell last week as a spike in Treasury yields became too pronounced to ignore.

The Dow Jones Industrial Average was on the cusp of records last Thursday when the yield on the 10-year Treasury note, which acts as the benchmark for many mortgages and consumer loans, topped 3.2 per cent for the first time since 2011.

Strangely, the catalysts for the spike in yields were those that typically lift the stock market - the strongest services-sector survey on record, a statement from Federal Reserve chairman Jerome Powell that the outlook for the US economy was "remarkably" positive and the retreat of the unemployment rate to its lowest level since the Vietnam War.

But when the Fed is in a rate-hiking phase, as it currently is, markets move into an upside-down mode where "good news is bad news". Treasury yields are moving higher largely because of anticipation of a more aggress…