Higher Stock Prices

&

Higher Bond Yields

Equals

Stock Market Crash!

What’s Different This Time? Stocks

The two-year US Treasury yield just shot through 1.33%, the highest since June 2009, when it had briefly spiked from 1% to 1.42%. And that had been the highest since November 2008. It eventually hit a low of 0.16% in September 2011

 But the longer the stock market ignores the rate hikes and continues to soar, or at least manages not to get crushed under their weight, the Fed will see no reason to slow down its efforts to catch up from being desperately behind the curve. And that would be a phenomenon a whole generation on Wall Street hasn’t yet seen.

 DYI:  If stocks continue to rise along with bond yields – the expected out performance by bonds will continue to widen until stocks retreat in price.  Only then will stocks return to its traditional role of outperforming bonds. 

Currently high quality long term corporate bonds held for the next 10 to 12 years will win the stock/bond performance race.  Simply put stocks are priced to the moon.

So….Hold onto your hats and your cash better values are ahead!

DYI