Tuesday Interest Rates and 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 |
The MACD indicates the 30Y rate is coming down short term. It might be a good time to short bonds. Then again, that might be a bit too much confidence in an economic recovery. Either way, it looks like bonds will rally for a bit. That might work against stocks.
The 30Y is giving a solid P&F sell signal longer-term. As mentioned, prices might bounce a bit short-term but the longer-term trend is likely lower for prices, higher for rates. Higher rates help support stocks as long as the rates move higher slowly and gradually. If rates get too high though, they start to indicate inflation, and that starts to work against stocks.
John Murphy points out another reason to watch rates. The Nikki Index tends to follow the 10Y rate, or at least it has been closely correlated for a quite a while. Who knows for sure if the relationship will continue, but if you believe the 10Y rate is header higher along with the 30Y, it is worth taking a look at the Nikki.
I think this chart is also from John Murphy. The US Dollar also follows the 10Y rate, so if the 10Y rate is headed higher, perhaps it means the US Dollar will finally end its relentless slide. That might be good news for slowing runaway commodities.
