10Y bonds S&P 500

‘What Is Clear Is That This Isn’t Clear’: The Definitive Ambiguous Guide To Stocks In A Rising Rates World

Let me tell you something about the whole "when do higher yields start to weigh on equity prices?" debate: it's a dead horse and everyone is going to continue to beat it mercilessly. 

Let me tell you something about the whole "when do higher yields start to weigh on equity prices?" debate: it's a dead horse and everyone is going to continue to beat it mercilessly. 
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3 comments on “‘What Is Clear Is That This Isn’t Clear’: The Definitive Ambiguous Guide To Stocks In A Rising Rates World

  1. I suggest you look at the relationship of stocks to the BAA1 long-term rate. When this rate is pushed upward by a rise in the 10yr or 30 YR Treasury, and then the spread starts to rise, the stock market collapses almost every time. That is your break-even point. Simply looking at the government bond sector does not provide the whole picture of where the liquidity / leverage issue is in the financial market that will trigger a stock market swoon.

    Right now, the BAA1 spread to the 30 Yr has remained tame (below 1.8%-2% is the historical threshold) as the 10 Year has increased. This tells me that there is still more on the upside for the 10 year to run before the stock market hits the flush handle. I suspect that the ECB and BOJ asset buying activities, not to mention all the fleeing capital from China are keeping the corporate rates at precariously tame positions. However, the HYG and JNK junk bond ETFs have recently sent out a few warning flares.

    Goldilocks lives right now. But her life span this time around is heavily dependent upon the actions of overseas Central Banks.

  2. Why am I seeing NRA membership ads?

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