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Wall Street investors are keeping their eyes on Treasury yields

Investors have turned their attention to Treasury yields as they look to gauge the performance of stocks over the final few months of 2021.

Equities posted their biggest losses since the beginning of the pandemic and there are worries it is a sign of things to come.

The S&P 500 suffered its biggest fall in September since March 2020.

The wobble came as yields on US treasuries jumped to a three-month high, raising alarm bells for investors who are already coming to terms with the US debt ceiling and the ongoing crisis with Evergrande in China.

"Investors are looking for a catalyst ... and the catalyst that they are currently focusing on is the direction of interest rates," Sam Stovall, chief investment strategist at CFRA, told Reuters.

Yields have an inverse relation to bond prices because when demand is high and Treasury prices rise, yields fall, and vice-versa.

Treasury yields are currently climbing back from historic lows which is seen as a sign of economic strength.

Their move came on the back of the Fed announcing that it might begin tapering its bond-buying last week, in addition to raising rates in 2022, ahead of expectations.

While yield increases could bode well for the outlook of the economy, they could dampen the attractiveness of stocks for investors.

It could all come down to decisions by policymakers this week as the US infrastructure deal is debated, in addition to US non-farm payrolls.

Whatever may be, investors have been spoiled so far in 2021, with the S&P 500 up by 17.74% since the beginning of the year.

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