There's a good reason and a bad reason for stocks to decline.
The good reason is that Treasury yields are moving up on hawkish commentary from the Fed. Mester added to it and US 2-year yields are up 14 bps on teh day to 3.05% after falling as low as 2.81% earlier. That's an enormous turnaround and a good reason to sell stocks as the Fed funds path reprices higher.
The bad reason, and I think the trigger for the latest move is a tweet from former (maybe still current?) China state mouthpiece Hu Xijin, who has been tweeting all kinds of stuff this week about Pelosi's visit.
This is the latest:
"PLA announced it would conduct live-fire exercises in 6 regions surrounding Taiwan island, a situation that surpassed 1996 Taiwan Strait crisis. This is not just a demonstration, but an actual exercise to liberate Taiwan. Pelosi's visit is bound to speed up China's unification."
Initially, that reads like it could mean that it's not a drill but an actual invasion. But what I think he's trying to say is that it will be a simulation of an invasion. Given the maps the PLA already put out of the drill, I thought that was obvious. In any case, I guess that just makes it easier for Taiwan to figure out what's coming.
