The Fed Will Sacrifice Stocks to Save Bonds

The single most important bond in the world is the 10-Year US Treasury bond.

This bond represents the “risk free” rate of return for a total economic cycle (roughly 10 years) denominated in the global reserve currency (the $USD).

Put simply, this is THE bond to watch if you want to keep an eye on how the financial system is acting. It is the bedrock for all risk… and its yield represents rate of return against which all risk assets are priced/ valued.

With that in mind, we need to note that the yield on the 10-Year US Treasury has broken ABOVE its long-term 20-year bull market trendline.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This is a MAJOR problem. And the Fed is going to “fix” it by crashing stocks.

The US financial system has over $60 trillion in debt securities sloshing around in it. ALL of this is priced based on the assumption that bond yields will continue to fall; which is why the fact that the yield on the 10-Year US Treasury is breaking out to the upside represents a true SYSTEMIC risk.

The fact is that the Fed HAS TO act to stop the bond bubble from bursting. And it’s going to do this by crashing stocks, and driving capital into the bond market to force yields lower.

This is why the Fed continues to hike interest rates and drain liquidity from the financial system via its now $40 billion per month QT program: the Fed HAS TO get bond yields back below their trendline.

So what does this mean?

 

 

The stock market is now borrowed time. Yes, stocks can still push to the upside based on pumping a handful of Tech stocks… but the BIG picture is that the Fed is trying to crash stocks to save bonds.

The time to prepare for this is NOW before the carnage hits.

On that note, we are already preparing our clients with a 21-page investment report that shows them FOUR investment strategies that will protect their capital when and if a stock market crash hits.

It's called The Stock Market Crash Survival Guide...and it is available exclusivelyto our clients.

To pick up one of the 100 copies...use the link below.

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Comments

JibjeResearch Tue, 07/17/2018 - 17:41 Permalink

BWaha hahahaha hahaha lolz...

No, it won't.

The Feds will sacrifice your fagfucks!

All average citizens, fixed incomers, worker-bees, bums and fags will maintain your fag life style until you die naturally/in FEMA camp ... BWah ahahhhaha ahahahhaha

GunnerySgtHartman JibjeResearch Wed, 07/18/2018 - 08:46 Permalink

First, the FED "fixed" economic growth in the early 2000s by pumping up the housing market with cheap money.

Then, when the housing market crashed and took the economy with it, the FED decided to "fix" the economy by printing money like there was no tomorrow, buying bonds, lowering rates to near zero, and pumping up the market.

Now, according to this article, the FED is going to "fix" the bond market buy sacrificing the stocks (and a host of other things) it has spent the last ten years pumping up with QE.  This will crash the economy, if it doesn't topple over on its own accord in the meantime.  Then we will see the FED engage in another scheme to "fix" the economy ... what that will be, nobody knows at this point.

So the FED pumps up one thing to "fix" it, and then when unintended consequences hit, it destroys the thing it "fixed" to "fix" another thing, creating more unintended consequences, another crash, and another "fix."  It's the FED's merry-go-round wrecking ball - wash, rinse, repeat.

The "wizards of smart" at the FED are sheer idiots, yet they will tell anyone who listens that they know what's best for the economy.  With friends like these, who needs enemies?!

In reply to by JibjeResearch

Racer Tue, 07/17/2018 - 18:31 Permalink

The Fed Sacrifice Stocks?!?

 

Phfff.... you are on the wrong planet. They NEVER sacrify stawks they have the PPT to jump in at any remote hint of a problem

buzzsaw99 Tue, 07/17/2018 - 19:38 Permalink

this is by far the worst misrepresentation of the current financial realities that i have ever read.  grossly wrong, contradictory, shallow, all in a few short paragraphs.  quite impressive actually.

Boris Badenov Tue, 07/17/2018 - 19:41 Permalink

I am in complete agreement with the Headline Title of this article.

The whole 2008 thing was, "No Bondholder is to take a loss".

It cost The Fed a lot of electronic ink though, but that's where their head's at. 

 

austrianboy Tue, 07/17/2018 - 19:45 Permalink

The Fed does not need to crash the stock market...

... and if they do, all of America's private pension plans immediately become exponentially more underfunded.

The Fed can save both stocks and bonds by simply halting QT and restarting QE.

The smart money thus expects that that is what they eventually will do.

 

 

An Shrubbery pitz Wed, 07/18/2018 - 13:30 Permalink

Gubmint pensions are mostly bonds. And they are chronically underfunded. That's the ONLY reason they're tightening to begin with. The flip side of that is now the interest we pay on the national debt (mostly run up by our Congress critters) goes up exponentially. Soon taxes will begin to rise again, especially corporate taxes. Then the giant sucking sound will get louder again, the everything bubble will burst, gangs of lederhosen zombies will be roaming the streets, Russia will invade the western us, Canada will invade detroit, pigs will fly, Luke will turn to the dark side...

Mark my words.

Buy my newsletter.

btfd

bitchez

In reply to by pitz

buzzsaw99 Tue, 07/17/2018 - 19:48 Permalink

This is why the Fed continues to hike interest rates and drain liquidity from the financial system via its now $40 billion per month QT program: the Fed HAS TO get bond yields back below their trendline.

so your theory is that the fed is selling treasurys in an effort to raise the price of treasurys?  SRSLY?

HominyTwin Tue, 07/17/2018 - 21:59 Permalink

Nope. They want higher growth and lower bonds because it shows their "medicine" for financial crisis has worked. Stocks are secondary to this dynamic.

MrNoItAll Tue, 07/17/2018 - 22:01 Permalink

The premise of this article is that bonds can be saved. No, they can't. No part of the current global financial system can be saved. DOOM is baked into the cake. It's been a long time coming, and it might still have a ways to go, but DOOM will be the end result.

AGuy Wed, 07/18/2018 - 01:33 Permalink

"The fact is that the Fed HAS TO act to stop the bond bubble from bursting. And it’s going to do this by crashing stocks, and driving capital into the bond market to force yields lower."

No it doesn't. All the Fed has to do is keep interest rates low. The reason why stock prices are astronomical is because the Fed kept interest rates low. If stocks crash, the Fed will just do more QE, sending Stock & Bonds back up.

The US is beyond normalizing interest rates. After 2021, the Interest on the Federal Debt & entitlements will exceed total Federal revenue (Taxes, Fees, etc). The US has painted itself into a corner with no way out.

lizzoilz Wed, 07/18/2018 - 01:42 Permalink

Shepwave is predicting some crazy 

 

 

e.com
Posted: 7/17/2018 23:34 EST

 

ShepWave Pre-Market / Intra Day Update for Wednesday Published

Most of us here at ShepWave have been trading for many years. We know that at key market turns there will be an apparent effort to shake-out weak traders. That is what I believe is happening currently.

TIME-CYCLE TURN DATE coming:  I have had numerous emails asking when the next TIME-CYCLE TURN DATE will occur.  The problem is that the next key TIME-CYCLE TURN DATE also has coming with it some seasonal factors

The recent market turns have been easy using this cycle.  For example the May 3rd and June 28th lows just being two examples of support areas demonstrates how this recent TIME-CYCLE TURN DATE--has played out perfectly--UP TO NOW!

Also--the fact that the TIME-CYCLE has been playing out so well for over a year now--others are catching on. We have had ShepWave subscribers send reports from other analysts copying what we have been saying regarding CYCLES. That is a definite sign that it is going to end.

JailBanksters Wed, 07/18/2018 - 02:38 Permalink

That is so much a given, without the Government Loaning money into existence there is no need for a Feral Reserve.

And it's just a promise for the Government to pay you back your Original Money + some new money it has loaned into existence to pay for the Interest. It's part of the Perpetual Money Machine, as long new money keeps going in one end, then old money comes out the rear (so to speak). If the Impeller ever gets jammed for any reason, the entire thing will just explode.

Davidduke2000 Wed, 07/18/2018 - 06:05 Permalink

the so-called fed that have less fed in it than Federal express, have nothing but propaganda in its arsenal. printing money to pay the bills seems the only remedy and blow smoke in people's ass. 

buzzsaw99 Wed, 07/18/2018 - 08:51 Permalink

the fed is selling usa treasurys because they can.  so in essence the fed is selling because of treasury market strength, not weakness.  they are raising the overnight because that allows them to jack the ioer rate, effectively funneling extra cash to their bank maggot buddies for doing nothing.  does that sound like tightening to you?

your conclusions were all wrong ryan.  [/captain ramius]

LawsofPhysics Wed, 07/18/2018 - 10:38 Permalink

FAIL!  Still accepting those paper/digital promises in exchange for the value of your labor?

Graham you are indeed one useless overcompensated paper-pusher!!!

Jack4952 Wed, 07/18/2018 - 12:42 Permalink

What NONSENSE !!!!!  The FED has been buying up BONDS on an almost daily basis. Why? To keep the yield low, thus forcing people seeking higher returns into the STOCK MARKET.

Just watch the next time that 10-year bonds sell off; then count the minutes until the major stock indexes rise! You can observe this phenomenon in real-time on www.TradersChoice.net by watching a few simple graphs.

This "article" is just another free advertisement for Phoenix Capital Marketing!!!!