Investors navigate a market of stocks, not a “stock market.”
Equity indexes slide, and US treasuries collapse against a rapid rise in interest rates. Unfortunately for the bulls, the charts show no signs of an imminent change in these underlying trends.
That’s the environment, and there’s no use fighting it.
Have no fear: We can still lean into market areas that enjoy a rising rate environment, mainly energy.
Here’s the US 30-year yield breaking to its highest level since the summer of ‘07:
Rising rates have been a worldwide phenomenon for the last two and a half years as yields have climbed non-stop.
Not only are we seeing the curve in the US reach decade-long highs, but the benchmark yields in Germany, France, Spain, and even Japan are also trading at multi-year highs.
Below is the US 10-year Yield reaching its highest level since 2007 after breaking out of a multi-month base three weeks ago.
US T-bonds are sliding to fresh decade lows. The S&P 500 completed a three-month top last week. And the Nasdaq 100 is on the verge of doing the same.
Those summer highs are receding into the collective memory bank, replaced by new lows and growing unease. Sellers are out in full force.
But instead of allowing the near-term selling pressure and overall choppy conditions to throw us off balance, let’s focus on the one underlying trend tying this market together…
Monday night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
Bonds across the curve are skidding to fresh contract lows as interest rates have a one-track mind…
Higher!
Check out the US 10-year yield posting fresh sixteen-year highs:
Not to be outdone, the 2-year yield just registered its highest level in seventeen years.
Interest rates across the curve are breaking to decade-plus highs in what has become a foot race.
It’s clear that the rising rate environment remains alive and well. An inverted yield curve keeps score, reminding us that shorter-duration yields are winning.
But I honestly don’t care what area of the curve is leading.
Now, Chinese government bonds are pressing toward fresh lows.
Sovereign debt epitomizes downside risk. And Chinese bonds are on the cusp of a significant breakdown – a breakdown that spells more trouble for global bond investors.
Check out the VanEck China Bond ETF $CBON:
CBON aims to track the ChinaBond China High Quality Index (debt mainly issued by the People’s Bank of China). And like US treasuries, Chinese government bonds are flirting with fresh multi-year lows.