US 10Y yield continues going up, a step further to explode
As I mentioned a lot in my previous posts, keep your eyes on the DXY and US 10Y yield. The uptrend continuation of US 10Y isn't a good thing for stocks. Basically, there're about 5 factors considered to impact the yield:
Economic conditions: Investor sentiment and confidence are influenced by economic factors. So yield tends to fall when economy sucks. Treasuries are regarded as safe heaven assets and buyers keep on buying to push the yield go down(negative correlation with treasury price)
Demand for risk-free securities: This is more or less related to the first one.
Supply of T-bills: When demand for T-bills fluctuates, so does the supply. In reality, I don't care to much about it.
Monetary policy: From my point of view, Fed can only directly impact the short term yield, say, 3M.
Inflation: An increase in prices, and a decrease in the purchasing value of currencies. This is a key factor, so watch out the inflation.
In a nutshell, the monetary easing policy is the key driver for stock market since the outbreak of covid-19. Once fed pull back its policy due to the normalization of the economy or inflation, the bull market may be over. I recalled every bull market in the US history has been terminated by rate hiking.
So, US 10Y yield is a bomb which will explode some day. Hopefully, it's not due to inflation. Now, almost everything is expensive. Everybody is so scared of being left behind. Join the bubble seems to be the only option.
Economic conditions: Investor sentiment and confidence are influenced by economic factors. So yield tends to fall when economy sucks. Treasuries are regarded as safe heaven assets and buyers keep on buying to push the yield go down(negative correlation with treasury price)
Demand for risk-free securities: This is more or less related to the first one.
Supply of T-bills: When demand for T-bills fluctuates, so does the supply. In reality, I don't care to much about it.
Monetary policy: From my point of view, Fed can only directly impact the short term yield, say, 3M.
Inflation: An increase in prices, and a decrease in the purchasing value of currencies. This is a key factor, so watch out the inflation.
In a nutshell, the monetary easing policy is the key driver for stock market since the outbreak of covid-19. Once fed pull back its policy due to the normalization of the economy or inflation, the bull market may be over. I recalled every bull market in the US history has been terminated by rate hiking.
So, US 10Y yield is a bomb which will explode some day. Hopefully, it's not due to inflation. Now, almost everything is expensive. Everybody is so scared of being left behind. Join the bubble seems to be the only option.
코멘트:
Look at this, it's going up crazy.
plan your trade and trade your plan
