Dow Jones Index fell another 198pts or1.5% last night on concerns of rising bond yields. The benchmark 10-year note yields broke out of its consolidation triangle and a reverse is likely to happen. The 10-year yields may continue to rise to as high as 6.5% between nowand 2011 according to Pacific Investment Management Co.'s Bill Gross, manager of the world's largest bond fund.
So, will this impact the Malaysian and Singaporean markets? I believe it will. We already seeing money flowing out of both the Malaysian Ringgit (MYR) and the Singapore Dollar (SGD) in the past few weeks. The MYR has weaken from 3.38 in late May to 3.4525 now while the SGD rebounded from April's low of 1.509 to the current 1.537. This shows that funds are moving out of local assets, be it bonds or stocks or something else.
Is a correction going to take place soon? I think it will be very soon. Maybe even today...
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