http://confoundedinterest.wordpress.com/2013/06/05/whoopsie-mortgage-applications-dive-11-5-as-rates-surge-and-adp-employment-misses/
YTD the 10 year is up .30%. That might not seem much, but when people are addicted to cheap money (ie. low interest rates), it's very easy to think this is the norm. In my lifetime, this might be the lowest rates ever. If it wasn't for our own government keeping rates artificially low (eg bond buying), interest rates would be higher.
Friday, June 07, 2013
Wednesday, June 05, 2013
Bonds Yields Rising & Gold
Given the recent action in the bond market, how does this affect the price of gold? It all depends.
If bond yields are rising in the event of a weakening dollar, or weakening economy, or inflation, that's very positive for gold.
However, if the bond yields are rising, because the Fed is aggressively tightening or selling off bonds, this is negative for gold (and stocks).
If bond yields are rising in the event of a weakening dollar, or weakening economy, or inflation, that's very positive for gold.
However, if the bond yields are rising, because the Fed is aggressively tightening or selling off bonds, this is negative for gold (and stocks).
Tuesday, June 04, 2013
Bull Pennant Formation for SPY
So ALL the major indexes are under pressure based on the Fed's comments less than two weeks ago. The news that there may be tapering in the amount of bond purchasing has woken up the bears and has caused some fear in both the US, Global, and World Markets. However, if we take a look at the charts over the last 6 months, we'll see the first leg (ie. A), second leg (ie. B), and formation of the third leg of a bull pennant. A bull pennant is developed when you have two intersecting lines coming at two different angles forming an intersection of which the underlying line (ie. support) surpasses the overlaying line (ie. resistance) forming the pennant flag. The SPY also had resistance at 160 which it broke out and that now provides a reference point to be future support. I believe the SPY will retest the 160 support line in the coming weeks as the pennant flag completes formation.
I believe the markets will continue to propel forward as the so called tapering will not occur. The recent economic data has been very week leaving the Fed no choice to continue their bond purchasing as they continue to try and spur the economy.
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