The 10-year Treasury note, known as the anchor of asset pricing, is still facing a sell-off. On April 18, the yield on the 10-year Treasury note reached its highest level since the end of 2018, at one point exceeding 2.88 per cent. Wall Street warned that 10-year Treasury yields broke through the resistance level of "the most important trend line in history", the 40-year downward trend in interest rates may be coming to an end, and the 40-year bull market in US Treasuries may also come to an end.

A growing number of investors in US stocks are worried that the turmoil in the US bond market could spread to the stock market.Goldman Sachs Group is reducing the allocation of the stock market. According to its latest financial report, Goldman Sachs Group sold about $1 billion worth of shares in the first quarter of this year, the third consecutive quarter of net sales. By the end of 2021, Goldman Sachs Group had accumulated net selling assets of more than $12 billion in the past two years. In other words, Goldman Sachs Group has sold a net of 13 billion US dollars, or about 82.7 billion yuan, so far.

The biggest uncertainty about the future of US stocks still comes from the Federal Reserve. The pace of the Fed's subsequent interest rate hikes and shrinking tables mainly depends on the "face" of US inflation. At present, under the background of the situation in Russia and Ukraine and the large-scale bird flu in the United States, energy and food prices in the United States are still facing greater risks of rise. The market expects that the Fed may launch a combination of "raising interest rates by 50 basis points + shrinking the table".

"Anchor of Asset pricing" sounded the alarm

One of the biggest potential threats to the US stock market has sounded the alarm again.

On April 18, 10-year Treasuries, known as the "anchor of asset pricing", suffered another sell-off, with yields on 10-year Treasuries reaching their highest level since the end of 2018, at one point exceeding 2.88 per cent.

Wall Street traders are betting that the Fed will accelerate the pace of tightening, raising interest rates and continue to sell Treasuries. Strategists at JPMorgan Chase & Co and MUFGSecuritiesAmericas predict that the yield on 10-year Treasuries could climb above 3 per cent.

As Treasury yields continue to rise, they are hitting the "most important trend line in history". Wall Street analysts pointed out that 10-year Treasury yields broke through the resistance level of "the most important trend line in history" at one point, the 40-year downward trend in interest rates may be coming to an end, and the 40-year bull market in Treasuries may also come to an end.

CarterBraxtonWorth, a technical analyst at Worthcharting, said that if 10-year Treasury yields break through its 40-year downward trend, it could be seen as the beginning of a new upward trend. This will mean that interest rates will continue to rise and the US stock market will continue to be under pressure.

The change in expectations for 10-year Treasury yields has undoubtedly put pressure on US stocks and even raised fears among US investors about the US recession.

A growing number of investors in US stocks are worried that the turmoil in the US bond market could spread to the stock market. Investors' demand for put options is rising, and buying put options will give them protection from stock market falls.

The one-month moving average of the ratio of SPDRS&P500ETFTrust open bearish contracts to open bullish contracts is 2.25, the highest level in the past four years, according to TradeAlert.

The Russell 2000 small-cap index and the S & P 500 retail ETF have also taken defensive options positions in recent weeks, according to Wall Street analysts.

In addition, the Chicago Board options Exchange volatility Index (VIX), known as the Wall Street "fear indicator", has recently been around 21 and has been well above its historical median for most of 2022.

Affected by the rise in u.s. bond yields, u.s. stocks came under pressure on Monday, with all three major indexes closing slightly lower, with the Dow down 0.11%, the s & p 500 down 0.02% and the Nasdaq down 0.14%. Boosted by expectations of an interest rate hike, the dollar hit a two-year high.

Cautious Goldman Sachs Group

Wall Street banks, which have the sharpest sense of smell, are also becoming cautious about the US stock market.

First of all, Goldman Sachs Group is reducing the allocation of the stock market. According to its latest financial report, Goldman Sachs Group sold about $1 billion worth of shares in the first quarter of this year, the third consecutive quarter of net sales. By the end of 2021, Goldman Sachs Group had accumulated net selling assets of more than $12 billion in the past two years. In other words, Goldman Sachs Group has sold a net of 13 billion US dollars, or about 82.7 billion yuan, so far.

In the first quarter of this year, Goldman Sachs Group's investment performance was not satisfactory, with a loss of $620 million on its stock investment in the open market, its third consecutive quarterly loss, with a cumulative loss of nearly $2 billion (about 12.7 billion yuan).

As a result, Goldman Sachs Group's asset management department's net income fell 88% in the first quarter, leaving only $546 million, compared with Goldman Sachs Group's net income of $4.6 billion a year ago.

Affected by this, Goldman Sachs Group's revenue and net profit declined to varying degrees in the first quarter. According to the financial report, Goldman Sachs Group's revenue in the first quarter was $12.93 billion, down 27% from a year earlier, and its profit fell 42% from a year earlier to $3.94 billion.

So far, Goldman Sachs Group has not disclosed the 13F report for the first quarter of this year, so to sort out Goldman Sachs Group's latest position, we need to look at its disclosure of the fourth quarter of 2021 report.

According to the report, as of the fourth quarter of 2021, the total market value of Goldman Sachs Group's position was $506.2 billion. Goldman Sachs Group added 790 shares and 2686 shares in the portfolio. At the same time, it also reduced its holdings of 2348 shares and cleared 547 shares. Among them, the top ten holders account for 18.06% of the total market capitalization.

In terms of heavy stocks, the proportion of the top three heavy stocks has declined compared with the previous quarter, and Microsoft Corp's shareholding proportion has dropped the most.

Specifically, the S & P ETF ranks first, with a position of about 37.618 million shares and a market capitalization of about $17.867 billion, accounting for 3.53% of the portfolio Apple Inc ranked second, with about 68.2644 million shares and a market capitalization of about $12.122 billion, down 2 per cent from the previous quarter and accounting for 2.39 per cent of the portfolio. Microsoft Corp ranked third, with about 32.342 million shares and a market capitalization of about $10.877 billion, down 9 per cent from the previous quarter to 2.15 per cent of the portfolio.

In the first quarter of this year, the S & P 500 fell nearly 5%, while Apple Inc and Microsoft Corp also recorded declines of 1.67% and 8.33% in the first quarter. The weak performance of the top three major stocks in the first quarter became the main reason for Goldman Sachs Group's losses.

Another investment that Goldman Sachs Group lost money came from BABA. In the third quarter of 2021, Goldman Sachs Group substantially increased its position in BABA 17.476 million shares, and then BABA's share price continued to plummet, falling by 34.7% in the third quarter. In the fourth quarter, it directly reduced its holdings of 8.2875 million shares of BABA, down 17 per cent from a month earlier, and BABA accounted for only 1.46 per cent of its holdings by the end of 2021. BABA's share price has continued to plummet since 2022, falling 19.6 per cent this year.

Where will the Federal Reserve go?

The biggest uncertainty about the future of US stocks still comes from the Federal Reserve.

The pace of the Fed's subsequent interest rate hikes and shrinking tables mainly depends on the "face" of US inflation. At present, the situation for some time to come may not be very optimistic.

First, commodity prices are still rising as the conflict between Russia and Ukraine continues and Europe and the United States impose energy sanctions on Russia.

On April 18, US natural gas futures prices rose to $7.55 per million British heat, breaking the January high and about double the price at the beginning of the year to the highest level in more than 13 years.

At the same time, the United States is exporting large amounts of natural gas to help Europe reduce its dependence on Russian energy supplies. Bloomberg reported that U.S. natural gas exports have almost reached their limit due to strong demand for natural gas in Europe.

In addition, food prices in the United States also face a greater risk of rising. At present, bird flu in the United States is still spreading on a large scale, and the United States Department of Agriculture has announced that it has detected a highly contagious bird flu virus in 27 states. Analysts pointed out that at present, this is the most serious bird flu outbreak in the United States since 2015.

About 27 million chickens and turkeys have been culled because of infection in the past two months, leading to a shortage of eggs and soaring prices, according to the USDA. Since January this year, the average price of a dozen eggs in the United States has soared from $1.20 to $3, an increase of nearly 150%, and the rise continues.

This could further exacerbate the continued "exploding" US inflation rate. Us food prices will rise by about 5 per cent in March, with poultry prices rising by about 7 per cent and fruit prices by between 5 per cent and 6 per cent, according to the USDA.

Under the pressure of rising energy and food prices, the risk of inflation in the United States is still high. As a result, the market expects that the Fed may introduce a combination of "raising interest rates by 50 basis points + shrinking the table" at its May meeting.

Judging from the latest schedule, a number of senior Fed officials will give public speeches in the coming week, most of which are directly related to monetary policy.

On Monday, US time, the famous "Eagle King" Brad of the Federal Open Market Committee of the Federal Reserve said that the Fed needs to act quickly to raise the benchmark interest rate to about 3.5% by the end of the year, during which time it needs to raise interest rates by 50 basis points several times. And the possibility of raising interest rates by 75 basis points should not be ruled out. In addition, if inflation does not fall as expected, the accelerated contraction could become a "plan B."

Separately, Federal Reserve Chairman Powell will deliver the Fed's closing speech before the silent period in the early hours of Friday morning, Beijing time, when he will join ECB President Christine Lagarde, Bank of England Governor Pele and other policy makers in a panel discussion on the global economy organized by IMF.