I believe interest rates are going to improve. Initially I said this would happen late August to Mid September and that holds true' we have seen some improvement, albeit...nominal improvement.
We're teetering on edge of a treasury rally & more QE. We can no longer look at chart fundamentals and rely solely on those indicators. We're at a point where stimulus & more stimulus determine the trickle down credit benefits.
Why do I think another treasury rally is on the horizon? Security...... sovereign economies have morphed into the world economic order since WWII with so much interdependence that other countries can only hope for better borrowing terms in America.
The Fed & Policy makers have engineered the situation so you sure better believe they understand it. We cannot expand with higher cost of credit. Treasury's overall trend has always been downward, that's because we monetize our prosperity through more credit - in layman terms: our money supply is expanded through loan. In this type of system you can have momentary rate increases but overall the trend is downward.
Good News....Bad News---I'm no expert; but that's a good thing; experts tend to be trained liar's whether they know it or not. The good news is mentioned above....I think we'll see more pumping & another rally; Mini Bubble.
Bad News, the bench mark 10 year treasury yield is just under 3% & was as low as 1.43% in 2012. We're running out of downward room, hence the engineered bubbles and bust. How can I say engineered?.....well you tell me? Can the FOMC have anymore influence on securities, equities & currency markets? Did you see the break off from normal patterns when the Fed Chairman mentioned a PLAN to curtail treasury purchases that was based on IF's, If the economy continues its improvement . Really.....the language couldn't have been any softer considering 85 billion a month being pumped into the system. You would think markets would be prepared for statements like the Fed made but the reactions across all markets was staggering & scary. When you see simultaneous shedding of securities and equities you're basically seeing the movers and shakers agree with everything mentioned above.
Incremental Contraction with moments of relief.
