By Thierry Laduguie | Friday 16 May 2014
The stock market reacted negatively to some mixed news yesterday. When a market is nearing exhaustion, it is common to see a sharp drop for no reason. Yesterday however, there was a reason for the fall. Bond yields were falling. When bond yields fall, investors are buying bond, they are moving money from the stock market to the bond market. This suggests that investors don't trust the current rally. The general consensus is that stocks are fully valued and the risk is on the downside so they move money into safer assets like bonds.
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