Rate hike is possibly seen in the next couple of months.
I applied comparison on the 3 biggest area where money circulation go. These 3 are Fund houses buying US treasuries, US treasury yields (I used 10yr for this chart) and Dow Jones Industrial/US Index.
Overall, what I can observe is that, when treasury yields start to rise, it rattles the Global Markets at first, but will be essential to fuel the Bull Run.
Once the rates are into the upper levels and where business and economy weakens due to expensive borrowings etc, rates need to be lowered again to strengthen the economy.
In 2013 scenario, it looks like the U.S. Economy was spoiled at very low Yields from 2011-2013, and need to pickup Yield% to increase mortgages, bank loans income and so on. And increasing Yields and Rate means that Central Bank is becoming confident that market is growing.
Hopefully, Central Bank is doing the correct thing, fueling up this Bull Market, and they must take this one step at a time.
No comments:
Post a Comment