This remains one of the most important charts for traders and investors.
Why is this chart relevant? In terms of rank and importance, the bond market takes precedence over all other asset classes. The price of money or interest rates is a key factor within global financial markets, where higher rates is a negative for equities (higher cost of borrowing) and which in turn impacts high valuation stocks. Lower interest rates makes borrowing more attractive which boosts speculative and/or high valuation shares.
On 13 June I highlighted the yield trading in a strong regime but approaching a 'near overbought' range, reiterating the same sentiment on 27 June as the yield traded at 2.5 to 3x it's mean per the 200-day linear regression channel as well as being positioned 51% above it's 200-day moving average. We have since seen yields unwind from 3.50% to a recent low of 2.65%. The development has been positive for equities with growth-like qualities and hence we have seen recently seen growth pare it's losses versus stocks with value-like characteristics. At current levels, the yields approaching the downward trend line extending back to the swings lows of 20 December 2021 and 07 March 2022.
Why is this chart relevant? In terms of rank and importance, the bond market takes precedence over all other asset classes. The price of money or interest rates is a key factor within global financial markets, where higher rates is a negative for equities (higher cost of borrowing) and which in turn impacts high valuation stocks. Lower interest rates makes borrowing more attractive which boosts speculative and/or high valuation shares.
On 13 June I highlighted the yield trading in a strong regime but approaching a 'near overbought' range, reiterating the same sentiment on 27 June as the yield traded at 2.5 to 3x it's mean per the 200-day linear regression channel as well as being positioned 51% above it's 200-day moving average. We have since seen yields unwind from 3.50% to a recent low of 2.65%. The development has been positive for equities with growth-like qualities and hence we have seen recently seen growth pare it's losses versus stocks with value-like characteristics. At current levels, the yields approaching the downward trend line extending back to the swings lows of 20 December 2021 and 07 March 2022.
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