The 10 Year T-Note yield hit a record low of 1.385% today, then recovered to a yield of 1.446%. This drop in yields is caused by a demand for bonds, and the factor causing this demand is a combination of the flight to safety from volatile stock markets and negative yields in countries like Germany and Japan.
Emerging markets may be driving markets higher, according to the Wall Street Journal. These markets were adversely affected by Brexit for no apparent reason other than simple correlation with the general market, and are recovering at a faster pace: A popular emerging market ETF, ticker EEM, is down only 0.20% since Thursday’s close, while the Nasdaq Composite (of a more accurate comparative risk level than the Dow) is still down close to a percent on the same period.
American consumer discretionary shares rose the most this past week (SPDR Discretionary XLY is up 1.10% today), suggesting that the market’s rise was caused not by a fundamental rectification of the questions Brexit poses, but a return to normal levels in stocks that should be unaffected by Brexit. This conclusion is further adduced by the fact that Treasury yields remain at near-record lows, indicating that Brexit still poses lurking risks that may resurface next week.