Why Monday could offer respite to stock investors after a temporary debacle

US stock markets are open for trading Monday, but bond markets are closed on the occasion of Columbus Day.

And, perhaps, the recommended pause in fixed income stocks in the US could it not come at a better time for equity investors after a move in which long-term government bond yields accelerated to unstable markets at several years highs.

On Friday, the yield on the 10-year Treasury Notes

TMUBMUSD10Y, + 1.37%

up 3 basis points, peaking at 7.27% over seven years, contributing to a week-on-week rise of 17.1 basis points, or 0.171 percentage point, marking its strongest weekly gain since February. Bond prices fall as yields rise.

Although the rise in yields was seen as reflecting the growing perception of a strong economy, the pace of rising benchmark rates, used for everything from auto loans to mortgages, surprised many investors and forced them to re-evaluate returns. Assets perceived as risky, such as equities, in relation to so-called risk-free public debt.

Wednesday's statement by Federal Reserve Chairman Jerome Powell that "we are far from being neutral at the moment" partly exacerbated the speed of interest rate movements in an interview with 'Atlantic. The neutral rate refers to the point where interest rates do not stimulate or slow the economy. Many investors have interpreted these comments as suggesting that the Fed may want to increase federal funds rates faster than expected.

Lily: 3 reasons why US government bond yields soar

As a result, the Nasdaq Composite Index

COMP -1.16%

-Populated by some of the most valued technology and Internet-related stocks – is experiencing its worst weekly decline since March 23, down 3.2%, while the Dow Jones Industrial Average Index

DJIA, -0.68%

recorded its largest decline in two sessions since June 19 and the S & P 500 index

SPX, -0.55%

According to Dow Jones Market Data, it suffered its worst percentage loss since May 29.

Worth the detour: Here are the stocks most sensitive to rising bond yields

Check-out: Bill Gross: That's why bonds are selling

Lily: The king of bonds, Jeff Gundlach, said the Treasury market was radically changing the deal

In this context, the closing recommended Monday by the Securities Industry and Financial Markets Association, an industrial group of financial markets. This holiday is one of only two days when the stock and bond markets diverge. Veterans Day is the other.

Columbus Day is not without controversy. Some cities have chosen to celebrate Aboriginal Peoples Day, which honors Native Americans and challenges the concept that Christopher Columbus was the first to discover America.

All other assets will normally trade on the same day, while forex traders will take their breath.

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