by Gary Christenson, Deviant Investor:
Bonds have risen in a 35 year bull market. That bull market looks tired and probably peaked in July of 2016.
The U.S. Dollar Index recently hit 14 year highs. Has the dollar finally peaked? Has it turned downward since January 3, 2017?
Stocks have been rising since the 2009 crash lows. Rounded to the nearest point, the Dow hit 20,000. Was that enough to make a final top before a major turn downward?
Gold made an important low over a year ago but we continually hear chatter about gold falling below $1,000, perhaps to $700 or even $350. I believe it has turned upward and the chatter will dissipate.
Let’s speculate about turning points in these important markets.
The global bond market is perhaps $100 trillion. Derivatives tied to interest rates are perhaps another $500 trillion. Yes, these are big numbers and interest rates affect practically everything – student loan debt, consumer spending, sovereign nation borrowing, housing sales, mortgage rates, credit card rates, bank profitability, availability of credit and more.
The global bond market is the largest financial bubble in history. A crash would be important …
Examine this chart of the U.S. T-bond.
The vertical red lines are spaced 91 months apart – about 7.6 years. The high was last July.
Previous important highs shown at the ovals were close to those 7.6 year cycle peaks.
Since July T-bonds are 25 points off their highs and the 30 year interest rate is nearly a point higher than its multi-decade low. After 35 years this bull market probably has died. A global blood bath in bonds will create a financial version of the holocaust. (A short term bounce looks likely as of January 17, 2017.)
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