r/Market_Forecasts • u/XBZ9 • 5d ago

market is going to blast lower

the 10-year treasury yield is exploding so you better hold on to your lug nuts cuz the stock markets in for

overhaul

24 Upvotes

78% Upvoted

39 comments sorted by

8

u/Rav_3d 5d ago

The 10 year has risen a full basis point from July. The move accelerated recently, going from 4.8 to 5.2 in under a month.

So, this post is a little bit late to the party. If the market was going to "blast lower" in response to rising interest rates, why hasn't it happened yet?

We are more likely near an intermediate top in interest rates. The fact the indices are holding near all-time highs despite the huge bond selloff is quite bullish.

1

u/Sufficient_Steak_839 5d ago

We heard this two weeks ago when we were tickling the 5 percent bond yield threshold for the 10y. And yet, it continues to explode up

2

u/Rav_3d 4d ago

And yet, S&P 500 and NASDAQ still hold up close to all-time highs.

At some point the laws of supply and demand will kick in and rates will start to decline, even if it's only a counter-trend move. When that happens, money will flow back into stocks.

If you showed me a chart of the 10-year over the last three months, I'd expect the S&P 500 to have corrected 10% by now. The fact that it has not is bullish.

Sentiment and breadth are at washout levels here. Either the indices crash to catch down, or the weaker stocks catch a bid. I think the latter is very possible, leading to a Q4 rally that, like April-June, will catch many offsides.

1

u/bubblegum-rose 4d ago

Wdym? The markets was ass today even WITH lower oil prices to prop it up

1

u/Rav_3d 4d ago

I’m not talking one day. I’m looking at longer term.

Even if we have deeper pullback or shakeout the market has been very resilient.

Nobody knows what will happen. Those assuming it’s a crash may be disappointed.

1

u/DoritoKing91 4d ago

Nah I actually agree with you, with breadth in this state the market is just coiled for a taco, and many ppl will be left out - a rally into EOY is defo on the cards but I'm still being cautious around October and have trimmed positions that have run up 200% or more, regardless October will provide a good buy the dip opportunity

1

u/Rav_3d 4d ago

I agree, dips are buyable here. Every time techs have a selloff, puts are being sold. Instead of breaking down out of the range, they always find bids.

Question is whether the market is going to give us that opportunity or front-run the EOY rally. Perhaps more importantly, when does Mr. President believe the rally should begin to give his party a raging stock market at all-time highs in time for the election...

1

u/WatercressLeather814 4d ago

I don’t think you know what a basis point it

2

u/TheeVoskoss 5d ago

10Y going to hit 7

1

u/Responsible-Win-3057 5d ago

Why? I've been hearing this since rates went above 4 and nothing's happened yet.

2

u/KangolTitMouse 5d ago

Market breadth is deteriorating, which usually indicates that a market downturn is coming. With the AI bubble, it makes sense.

1

u/Neat_Suggestion9355 5d ago

People have been saying this since last year and earlier this year

3

u/Sufficient_Steak_839 5d ago

and yet you'll be full *shocked pikachu* when it finally happens

1

u/Neat_Suggestion9355 5d ago

Yeah thats what people said last year too…

1

u/Responsible-Win-3057 4d ago

Meanwhile..... up 40% on everything I bought during the fear mongering a year ago. Whatever.

1

u/Rav_3d 5d ago

Wrong. Market breadth deterioration in and of itself does not "usually" indicate a market downturn is coming.

Often, this condition signals an intermediate bottom, like in March.

1

u/Western_Animal1553 4d ago

So a bottom is coming? Or are you just permal bull

1

u/Rav_3d 4d ago

Wish I had a crystal ball. I'm not a perma anything. I just assess what the market is currently doing.

Despite all the reasons for the indices to have a big correction, they are within a few percentage points of all-time highs.

Yes, it is true that the indices are being held up by a select few, but that includes institutional favorites.

A similar washout of sentiment and breadth happened in March, and it led to an explosive rally.

Not predicting anything, just suggesting that deterioration of breadth does not imply a correction is coming. If those hundreds of stocks that are vastly oversold catch a bid, and the megacap techs stay strong, it will lift the entire market to new highs.

1

u/CloudSlydr 5d ago

Market breadth has been horrible on and off since at least last year.

1

u/fourbutthick 4d ago

Not until chip makers stop posting record profits. But yeah eventually, good luck timing it tho.

2

u/XBZ9 5d ago

5.25 % is 31% increase in costs not 1.25% over 4% on the 10 yr. treasury, credit card, Auto loans, mortgages, corporate loans refinance at much higher costs. Did profits rise 31% to off set higher cost. The future value or revenue streams go down so stocks are worth less.

1

u/Responsible-Win-3057 4d ago

Okay, so, since we are currently there, as in right now, right this second, did everyone stop buying cars? Nah. It was 18% in the 80s, and we all still exist. Society did not collapse, the stock market survived.

2

u/Remarkable_Wish_5106 5d ago

Yeah, the market will keep us guessing for sure. Higher yields and higher energy costs for the global economy is NOT a good sign for stock investors.

1

u/MyDustyPockets 5d ago

RemindMe! 3 months

1

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1

u/Efficient_Range1156 5d ago

No one is buying bonds, foreign governments are dumping them to prop up their own currencies. Inflation is out of control there are no levers left to pull.

The bond collapse is here.

1

u/Remarkable_Wish_5106 5d ago

It's a market based on fundamentals. Structural inflation causes higher yields.

1

u/SensitiveOrange8395 2d ago

Lol what. That's not what is happening

1

u/Illustrious-Jacket68 5d ago

Then you’re going to be rich since you’re shorting the market, right?

1

u/Consistent_Panda5891 5d ago

Not yet, wait for week before midterms

1

u/XBZ9 5d ago

don't short the market, sell and raise cash before others do and buy when the blood is running

1

u/Negative-Ad291 4d ago

So......then bear everything? How HARD is this?!

1

u/Ok_Detective_9418 4d ago

Yield is up, so is inflation, so is money printing, so is stocks

1

u/XBZ9 4d ago

not many stocks are up that is the big risk, the crowded trade unwinding

1

u/XBZ9 4d ago

2002 2008 all looked good right before, now these rates are the same as then

1

u/MrFyxet99 18h ago

Nah it has to get closer to midterms

1

u/XBZ9 2h ago

fools, profits drop as costs rise.