Here is a log-scale chart of 10 Year Interest Rates in the United States as measured by the $TYX Index.
I have noted several important events along the way:
1. 1987 stock market peak and crash
2. 1994 sideways stock market and bond market bear-market that destroyed Long Term Capital Management and their leveraged bets on sub-prime loans while shorting US Treasuries.
3. Internet Bubble with the Nasdaq Composite rising from 750 to 5000+ in 5 years.
4. Real estate bubble and real estate crash from bank deleveraging.
5. The current rally in interest rates hasn't touched the long term downtrend that is still in place. Yes, rates have risen and persistently so, but they haven't violated the even the lowest rates seen in 2003. You can see that each of the previous "situations" happened after rates rose well into the range of the previous "crisis".
If you look at the chart without "fear" that has been trumpeted around various media channels and by analysts, you can see that we aren't at the point where this rise represents a problem. The fear and fear-mongering about the current rise in rates is a sign of the bearish attitude and frustration that people have about life and their view of the world.
What is true is that a rise in rates means that "demand for money is rising" and that can come from a variety of reasons, including a favorable business environment, positive changes in tax laws, Government deficit spending, increasing demand for homes from the next generation, etc.
Let's be open minded and try to look at markets rationally. If you recall for the past two years or more the strongest argument placed about the market was that VIX was low and that was a sign of a top in the market and that has turned out to be entirely incorrect, as I pointed out here many times. (See my VIX charts).
Rising rates are NOT bearish in and of themselves. Rising rates AND other factors need to be in place to dampen the buying power of companies for repurchasing their stock and investing. Pension plans are woefully underfunded across the nation and it is entirely possible that pension plans will borrow at low rates and invest in other assets to grow their plan assets to meet long term investment goals.
I have noted several important events along the way:
1. 1987 stock market peak and crash
2. 1994 sideways stock market and bond market bear-market that destroyed Long Term Capital Management and their leveraged bets on sub-prime loans while shorting US Treasuries.
3. Internet Bubble with the Nasdaq Composite rising from 750 to 5000+ in 5 years.
4. Real estate bubble and real estate crash from bank deleveraging.
5. The current rally in interest rates hasn't touched the long term downtrend that is still in place. Yes, rates have risen and persistently so, but they haven't violated the even the lowest rates seen in 2003. You can see that each of the previous "situations" happened after rates rose well into the range of the previous "crisis".
If you look at the chart without "fear" that has been trumpeted around various media channels and by analysts, you can see that we aren't at the point where this rise represents a problem. The fear and fear-mongering about the current rise in rates is a sign of the bearish attitude and frustration that people have about life and their view of the world.
What is true is that a rise in rates means that "demand for money is rising" and that can come from a variety of reasons, including a favorable business environment, positive changes in tax laws, Government deficit spending, increasing demand for homes from the next generation, etc.
Let's be open minded and try to look at markets rationally. If you recall for the past two years or more the strongest argument placed about the market was that VIX was low and that was a sign of a top in the market and that has turned out to be entirely incorrect, as I pointed out here many times. (See my VIX charts).
Rising rates are NOT bearish in and of themselves. Rising rates AND other factors need to be in place to dampen the buying power of companies for repurchasing their stock and investing. Pension plans are woefully underfunded across the nation and it is entirely possible that pension plans will borrow at low rates and invest in other assets to grow their plan assets to meet long term investment goals.
Comment:
Interest rates peaked in December RIGHT AT THE DOWNTREND LINE that I had outlined here. Now we've seen the economy soften and the Fed back off its tough talk and I think it makes sense that we've gone through both MANIC-DEPRESSION and we could have a number of months of action inside of these two extremes. This makes sense to me as rates were TOO HIGH before and TOO LOW at the recent panic low.
January 18, 2019. 10:52AM EST
January 18, 2019. 10:52AM EST
Comment:
Still in a downtrend....
May 20, 2019
May 20, 2019
Comment:
One heck of a downtrend.
This is a PERFECT "panic environment" to stop looking for lower rates.
Exit bonds of all durations - right here - right now.
8/14/2019. 12:42PM EST.
Why? The same people who predicted rates would keep rising right at the top are now panicked about rates falling now. It's perverse, but it is good to exit a winning trade when it is winning in a dramatic way and in the news headlines.
This is a PERFECT "panic environment" to stop looking for lower rates.
Exit bonds of all durations - right here - right now.
8/14/2019. 12:42PM EST.
Why? The same people who predicted rates would keep rising right at the top are now panicked about rates falling now. It's perverse, but it is good to exit a winning trade when it is winning in a dramatic way and in the news headlines.
Comment:
Comment:
Subscribe to my indicator package KEY HIDDEN LEVELS $10/mo or $100/year and join me in the trading room KEY HIDDEN LEVELS here at TradingView.com
The reference line that I drew back on September 26th ended up being a useful line for the peak in rates and sustains the downtrend/deflationary pressures we have been seeing. The Fed's rise in rates is forcing a "situation" in the general economy, which time will reveal itself. Stay tuned.
I would also suggest you review where the US equity market is positioned relative to the "earnings release dates" from the DJIA $DJI Average. The level is 24,265 where the market is considered "at its value area" and above that level it is "overbought" and below that level it is "oversold". So far there have been a few trades on either side of this "VALUE ZONE" that were tradable.
Here's wishing you balance and peace for the balance of this year.
Keep your eye on the big picture and stay tuned in the "Key Hidden Levels Chat Room" where I am commenting each and every day.
All the best,
Tim. 8:47AM EST Dec 6th, 2018