If we saw Yields go much higher and 10-years spike above 3% within a very short period of time, that would be the greatest risk to asset class right now, says Peter Cardillo, First Standard Financial, talking to ET Now.Edited excerpts: It continues to be volatile for global markets but in particular despite the mayhem that we witnessed at the start of this week and the flash crash, yields have not eased in a meaningful manner. They are still elevated at 2.85%. 3% historically has been a risk-off zone when it comes to other asset classes in the world. Do you think that at 2.85%, the concern on yields still remains?Yes. It was quite evident in yesterday’s Market. At one point the market was up and then when yields backed up to the highs of last Friday, we saw the market actually go down. The fear factor of higher yields is still very much in the marketplace and of course sentiment has changed to the point where we have a lot of volatility. While I believe that we probably made a market bottom on Monday, I do think that we are going to see very volatile session going forward and by that I mean you could see swings of may be 1% or 2% from the higher to the low end of the trading range of the day.But it is not going to get worse than that. It is not like we are going to be seeing a conclusive reversal of this strong bull market that we have been in over the last 10 years?I do not think so. The fundamentals are very strong and if you look at the global economy, it is quite strong. I do not think that it is the end of the bull market just yet and I do not think that we have seen the highs but I do think that we are entering a period of where higher yields and the prospects of higher inflation is going to cap the markets. As I said, you will see more volatility along the way.Volatility is a given because 2017 in a sense was an outlier in terms of market action and equity as an asset class will see volatility but volatility does not means risk. What do you think is the risk to this market?Well the risks to this market obviously is if we should break the lows that we established on Monday, then we could find ourselves in a full-blown correction. If we saw yields go much higher and 10-years spike above 3% within a very short period of time, that would be the greatest risk to asset class right now.
Source: ET