Treasury Yields, Stocks, and Precious Metals

I received the comment today: "...what effect do you think these rising yields [in treasuries] will have on stocks and PMs? "

My Response:

Though in general rising treasury yields are negatively correlated with stock and commodity prices, in this case, I dont think the rising yields will have much of an impact on the price of either (at least for the time being-this early in the cycle). That is because, to reiterate my thoughts from my last couple of posts, yields are not increasing because of a belief in a reinvigorated economy, rather they are rising in anticipation of an onslaught of treasury supply in 2011. This means that despite the rising yields, the Fed will continue to leave an easy monetary policy in place which will benefit both stocks and precious metals.

BTW, I think the question and answer format is great for this blog, and I encourage readers to continue asking questions.