A negative day with the Dow Jones down 305 points (-0.91%) and the Nasdaq down 77 points (-0.70%)
It has been the contention of this blog for many years that the FED follows 3 and 6 month Treasury rates. In other words, it chases them both up and down. Historical data and recent market action confirm this without any doubt.
And here is where it gets interesting. While the FED has been chasing short-term yields most of this year, that is no longer the case. For instance, when the FED hiked 75 bps on November 2nd, 6 Month Treasury stood at 4.6%. And today, it stands at 4.71%.
In other words, there are two incredibly important points to consider…..
- A 50 bps increase next week would all but line the FED up with what the market demands.
- Our mathematical and timing analysis of the 10 Year Treasury from a few weeks ago suggests 10 Year is correcting over the next few months to well below 3%.
The above suggests that nearly all pressure on the FED to continue hiking interest rates aggressively has dissipated. If anything, they might have to announce a pause. At the very least signal a slow down in hikes.
Now, imagine what that would do to the equity markets.
Luckily, you no longer have to guess. Our timing and mathematical work clearly shows what the stock market will do next in both price and time going forward. To see that work, please Click Here