- The U.S. economy could be close to a tipping point as bond yields see a bear steepening across the curve, with the long end rising sharply this week.
Analysts have noted that the rise in bond yields is creating a market environment similar to that of previous recessionary periods. Naeem Aslam, chief investment officer at Zaye Capital Markets, said markets will be sensitive to disappointing economic data ahead of Friday's nonfarm payrolls report. The comments come after private payrolls processor ADP said that the private sector added only 89,000 jobs last month, significantly missing expectations.
Some analysts have said that gold could be an attractive buy as prices trade near their lowest levels since early March; other analysts, however, have said that a more cautious approach is warranted as yields still have room to move higher. Schneider said that higher bond yields could already be taking their toll on the U.S. economy and weak economic growth and stubborn inflation continue to create a stagflationary environment, which would be bullish for gold.