Tuesday Interest Rates & the US Dollar
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
I'm encouraged by this week's market, but it seems to need more time to consolidate, stabilize and retest its lows. The TBill rate has been very important showing investors remain very nervous about the markets as money flows into TBills pushing down the rate. This indicates that it isn't quite yet time to rush back into stocks, and it probably also indicates more declines in the Fed Funds rate ahead.
Above is the longer term view of the TBill rate with the SPX below. The declining rate was a stock market sell signal in late 2000 and now again in 2007. Most of us are conditioned to not fight the Fed, but the market now seems to be more likely to follow short-term rates higher, not lower. But I still agree that the Fed will win eventually, so the good news is that we are getting closer to when the Fed will win this battle.
Above is another interesting view of the TBill rate and the stock market. In the 80's and 90's, the TBill rate peaks looked more like opportunities to buy stocks. Starting in 2000, the relationship between the TBill rate and stocks changed. Now when TBill rates peak, it means money is starting to move from stocks to the safety of TBills.
