The Infamous US Debt and Equity Connection !!

TVC:US10Y   US Government Bonds 10 YR Yield
In the words of Sir Ray Dalio,

"Due to the lack of free-market buying of US debt, the central banks had to buy it and had to print a lot of money to buy it with so much so that they drove rates down to “artificially” low levels, which “artificially” supported financial asset prices. Now, there’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money. They’re buying all sorts of things and pushing yields on everything down. Now you have stocks that have gone up, and you have classic bubble dynamics in so many different assets."

Markets are overheated because of the funny money. The rising 10Y yield is not a good sign for equity markets. The majority of the asset classes are overvalued, don't let anyone tell you otherwise. It will take less than a week for FII's to withdraw their money from the markets and DII's won't be able to hold for long.

Even the most progressively optimistic strategy is to plan out a good short trade from here.
Comment: The last pointer denotes the 2018 crash where we saw a correction of 20%.


Very well illustrated and shows how things are going to pan out
Better to stock on precious metals
+1 Reply
@dubaikk, Anything that is not equity looks good at this moment.

But on a lighter note I don't think markets would crash because alot of traders are sitting on the sidelines and markets are smart enough to sense that.

Markets can anyways stay irrational for long period of time.
+1 Reply
dubaikk Sarthak_Singh
@Sarthak_Singh, totally agree, but the unconditional money printing would have its inevitable consequences ultimately. Timeline nobody can explain.

Stock markets worldwide have been just going up despite every country’s GDP dipping down, unemployment at unprecedented highs due to the pandemic/ lock down.

Clearly it’s a rigged.
+1 Reply
@dubaikk, It would be interesting to see how it will manifest in the coming times.

Markets although are acting pretty similar to how they did last year around this time.
+1 Reply
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