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posted on 11 February 2018

The Bond Bear Could Destroy Growth And Crush Stocks

Written by , Rick's Picks

March T-Bond futures have now closed for two consecutive weeks below the 145^02 midpoint support of the big downtrend shown. This is quite bearish, implying as it does that a further fall to 130^20 could lie ahead.


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Odds of this will shorten if and when the key low at 142^31 recorded in September 2014 gives way. If the 130^20 downside target is reached, it would correspond to an interest rate of about 3.74% on the 30-Year - up very dramatically from a current 3.13%. That would obviously have a very significant impact on a U.S. economy that has become dependent on ultra-low interest rates.

Click for large image.


CNBC’s panel of ‘experts,’ including Maria Bartiromo, said recently that rates above 3% would be no big deal, since the U.S. economy has survived rates well above 10% on long-term bonds. This is idiotic, since the high rates did not follow a period of extremely low rates such as we have had for the last decade. Rates above 4%, if not an even lower threshold, will crush the housing and auto sectors and set stocks falling so hard that last week’s big sell-off will look relatively mild in comparison.

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