Monday, March 8, 2021

My chart on UST10 Year Treasury is pointing to a target of 2.5% from the current 1.6% (could potentially spark off a valuation reset in equities)


UST10 Year Treasury – The chart is pointing to a target of 2.5% and the uptrend has started and it is resisted currently at 1.6%, it should break above the 1.6% mark to ahead for the 2.00% level.

The key resistance remains at 2.50% and I expect the Fed will not tolerate rates above 2.5%. This could be the level the Fed will act to bring the long term yield down. The impending yield increase will inevitably result in valuation reset in equities especially the Tech stocks.

The IIF recently released its Global Debt Monitor which reported that total global debt had reached US$280 trillion and the worldwide debt-to-GDP ratio is now at 355%. How this will ever be repaid I have no idea. How this will be serviced if interest rates were to rise is another matter to ponder. debt servicing costs would increase by several trillion dollars should average interest rates simply rise to pre-GFC levels …..more money printing to get out of the debt hole?  US personal savings rate has now risen to 20.5% from 13% with the potential to rise even more if biden 1.9 trillion stimulus reaches the US household. The stage will be set for a consumer spending  boom , all these are pointing to higher rates and inflation.

All posts and charts are for educational and illustration purposes only

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