More Clues Confirmed This

The Fed owns 1/3 of mortgage-backed securities in the US (this guy couldn’t be more wrong). Please pity my pathetic existence, that I am sharing the YouTube space with this person. This isn’t the worst, either, ugh.

Look What We Have Here

Blue is the 10-Yr Bond (IEF), Purple is S&P 500 (SPY)

Despite the fact that the Federal Reserve is promising increased interest rates, and importantly (and not included in the price of assets today), hasn’t even begun to sell its massive holdings of debt securities, there has been clear buying of US treasuries on the worst down days.

So, in an environment where interest rates should be marching higher, they have stopped and begun to turn lower (.2% is a HUGE move in interest rates). There are many possible reasons. Here are a few.

  • The information from Walmart and Target was so bad, that it possibly removed the schedule of rate increases by the Federal Reserve (not impossible, but pretty unlikely).

  • Deep stock losses finally have turned to US Treasuries as a safe haven (likely).

  • Forced selling of equities have led to selling winners, who have been short the US Treasury market (likely, especially in light of the comments in the video).

  • Re-allocation away from stocks to bonds on huge, influential portfolios (getting convinced due to the extremely high level of the USD which can be converted into large amounts of EUR or JPY. We will never be told until months later). If this were the case, the moves down in equities would be much, much larger than this, but this is the uber-pro involved, who could be programmatically selling. But the yields in the fixed-income market will become attractive enough, at some point, to hugely reallocate, back to its preferred position (bonds 70=80%).