Rising US treasury yields, falling US tech stock prices, and incessant tweeting by President Trump were all factors contributing to the global sell-off this week. President Trump’s tweet questioned the Fed’s tightening policy. It appears the news of the rate hikes took some time to be digested by bond investors with BlackRock’s debt ETF recording a record outflow of almost $2bn in a single day. The bond market contagion spread to the US Equity market with technology stocks bearing the brunt of the headwinds.
However, the rout appears to not be as strong as headlines make out. With earnings reports for tech companies pencilled in for the 25th October, it wouldn’t be a surprise to see share prices for tech stocks rally as investors become attracted by resilient earnings prices and strong cash flow statements. Overall, it appears that the age-old adage of exercising caution and investing for long term growth continues to be the best route for investors.