Watching credit markets can help you with equities

This is where we are on a weekly basis in the U.S. 10 year bond yield.

Range bound, in no man’s land and oscillating between 1.75% and 1.15% and a reasonable trading range at that.

It has also been a trap lately. At the upper end, many are going long cyclicals and financials only to be whipsawed when the 10’s trade to the lower end, which is when many go long in technology.

Let’s watch which way its break into this triangle.

My bet is that the yield goes lower a little bit more and sends the S&P 500 to 4,440 or 4,360 (which is 1.6% – 3.4% below today’s close) and set us up for a new equities advance.

Irrespective of this little nuance prediction, today, there are a host of quality businesses whose stock prices have received a drubbing.

December 2, 2021

by Rob Zdravevski

rob@karriasset.com.au