In this video, I discuss the recent sharp move down in stocks, Treasuries, and gold, and whether I expect it to continue.
The combination of an ugly 7-year Treasury auction, disappointing earnings results for some large tech stocks, and a resurgence of COVID cases led to a correlated sell-off in both risk assets and Treasuries last week. The last time we saw similar correlated moves was at the height of the liquidity crisis in March 2020.
When Treasuries begin to sell off in tandem with stocks, and risk parity funds are forced to begin to delever, that is usually when the Fed steps in. I believe that their hands are temporarily tied until we get next Tuesday's Presidential election results.
After that, the Fed will again be able to intervene aggressively in the markets to keep Treasury yields low and asset prices up-- at least until Congress is finally able to pass its massive stimulus bill.
Not investment advice! Consult a financial advisor.
Ugly Treasury auction:
https://www.zerohedge.com/markets/ugly-tailing-7y-treasury-auction-sends-10y-yield-session-highTreasury market now too big to avoid Fed intervention:
https://www.bloomberg.com/news/articles/2020-10-14/the-treasury-market-may-be-so-big-that-the-fed-can-t-step-awayFed triggers buy program in the stock market:
https://twitter.com/zerohedge/status/1322195478273024000Prediction markets for 2020 election:
https://www.predictit.org/markets/detail/3698/Who-will-win-the-2020-US-presidential-electionCheck out my online trading courses:
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