US Treasury Yields hit two year highs last night off the back of strong US data, while the S&P index struggled as traders braced themselves for the possibility of QE tapering.
Data indicated that the level of joblessness fell to a six year low last week, while CPI inflation rose again in July.
Coupled with news the eurozone is out of recession, it appeared to some investors that US Federal Reserve chairman Ben Bernanke may soon act on his suggestion the central bank would “gradually reduce the flow of purchases,” in its quantitative easing programme, depending on the strength of economic data and inflation levels.
This nervousness has made borrowing costs more expensive, as people have become concerned about a rise in interest rates, and a lack of liquidity in the market if the central bank decide to buy less assets.
