I already made my prediction in the last post. However, I just gave a time frame of when it may start to drop. This information may be sufficient for an investor who wants to sit do things longer term, but as a trader I personally would like to know exactly second when to switch my bullish positions to bearish positions. Sorry to be so schizophrenic; the markets require it! The following chart should be of fundamental interests as it highlights the 10 year treasury yield vs. foreign holdings.
The drop in foreign holdings while the increase of yields causes express concern to me. It means the trust of foreigners in our government finances are dropping as the cost of borrowing for us is increasing(particularly for mortgages).
Tipping the Scale
It is the moment where enough "vigilante" bond traders refuse to keep buying treasuries without demanding higher interest rates. If and when that moment in time occurs, the scale will tip from bulls to bears. The major media news outlets will report it but I'll be specifically looking for a one day drop in the S&P500 greater than 3% to switch positions or a period of 3 days in a row which the S&P500 declines greater than 1%.
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The drop in foreign holdings while the increase of yields causes express concern to me. It means the trust of foreigners in our government finances are dropping as the cost of borrowing for us is increasing(particularly for mortgages).
Tipping the Scale
It is the moment where enough "vigilante" bond traders refuse to keep buying treasuries without demanding higher interest rates. If and when that moment in time occurs, the scale will tip from bulls to bears. The major media news outlets will report it but I'll be specifically looking for a one day drop in the S&P500 greater than 3% to switch positions or a period of 3 days in a row which the S&P500 declines greater than 1%.
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