In this Weekly Briefing we will be provide some premium research to all of our members. Our AI system is indicating an impending low in bonds and top in 10-year rates between March 22-29. This will ease short term algorithmic selling in most risk assets. Look for the stock market and metals to put in lows this week followed by rallies into April 5-7. Barring an outlier event, we expect equities to continue to rally into June/July of 2021 along with metals, energy, and other commodities.
Wall Street has made a big deal of the rising 10-year rate. The facts are rising rates are good for the stock market when one examines decades of trading history. They are indicative of an expanding economy unlike when rates are cheap and depressed and there is little economic expansion. Bullion banks use rising rates to attack precious metals. From 1979-1980 investors saw short term rates rocket over 12% and precious metals along with them. Gold moves up when investors lose confidence in our system of government or when they feel the powers that be have lost control of our economic system. The Fed today employs many more tools and manipulative techniques than decades past. These new tools are needed as the debt load has grown and the pressure of servicing a debt-ridden economy has grown with it. Eventually there will be a price to be paid.
Sentiment is resetting in 10-year bonds. We expect a rally to commence prior to month end. But why does the 10-year get so much attention? It is a large parking spot for short term capital by big money. No one is touching longer term debt regardless of the more attractive interest rates. Higher interest rates do not do much good when bonds eventually head lower and possibly collapse. Holding to maturity is not a wise option in our $27 trillion US debt system. We are witnessing a knee jerk reaction from algorithmic selling. The safest parking garage for capital on the planet is currently the US stock market DOW, SPX and NDX.
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