Tuesday, September 11, 2012

Bond market May Be Telling Us Something


This is the third time the yield on the 30 T-Bond has hit 2.85%. It is trading in a very narrow range and therefore I think it is possible that we could break 3% on the 30 year soon. A break above 3% could takes us to 3.25%. The stock market will come under pressure if the yield break 3%. If the yield starts to climb above 3% look for the equity markets to buuild momentum to the downside.

If S&P doesn't see any real progress on the level of debt in the lame duck secession they have already warned about additional down grades. This could be what we are seeing in the action in the bond markets. Yields over 3% would put price pressure on most of the Fed Purchases and potentially take QE3 off the table. 


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