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Wednesday, May 26, 2010

Market trend and US bond rates

There is plenty of risk in the world right now, North Korea is becoming more of a threat, still problems credit issues in Europe, and America still losing jobs at an alarming rate.

But Tuesday we may have seen the swing low in the market, and poised for market to go higher. This next leg up can last days or couple of months.
Also the government right now has plenty of "valid" reasons to announce more reckless debt creation, coupled with US treasury rates on the decline.

This government has shown it is capable of digging a much deeper hole, and I don't see any reason why the pattern we have seen since 2002 will change now. It is possible we will shortly see some new scheme to create public debt to "help private companies" to be announced. With rates on the downswing, the government now has more breathing room.

I really don't see the market collapsing until we see rates truly push higher, above 5%.
When that happens, the US government will need to chose between government insolvency or market devaluation. I suspect the second but anything is possible.

For now, two new charts. I am nibbling at buying gold/gold miners again.

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