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I've been talking for a while now about how the bond market influences the stock market, and we're likely going to get an object lesson in that this week.
With Treasury yields having climbed north of 5% before settling back down just under that today, we're seeing some serious pain for bonds, given that those rate hikes are all market-driven, and not because of continued interference from the Federal Reserve.
That's going to put a lot of pressure on a stock market that's already broken a critical support level-the S&P 500 closed below its 200-day moving average, an indicator that things could go even lower. If it breaks below 4200, watch out, because we're going to see a lot of margin-selling and capitulation at that point.
And of course, the continuing situation in the Middle East is a looming threat to markets, because while things aren't as out of control as they could be, any negative change in that situation could speed up the fall of markets already on their way down.
All of this means that we're going to stay on defense as we wait to see how all of these factors play out, and if some good news can bring investor confidence back up, whether it's a positive earnings season, GDP growth, or any number of other metrics on the horizon.
Check out this video for my overview of what you need to watch out for this week and why:
As always, we'll be looking for opportunities to make smart plays, and we'll keep you posted as we find them. Be careful out there, and keep an eye out for more updates.
The post What to Watch for This Week as Bonds Face a Repricing Rollercoaster appeared first on Total Wealth.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.