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Friday, April 2, 2010

Friday updates

Rates are inching up, and now getting to the point of a possible break-out. The longer term rates are accelerating upwards at a faster pace then the shorter term rates. This could end up being the final nail in the mortgage bankers coffin if the 10 year breaks above 4% pushing the ARM's higher, and slow what little sales of Real Estate are happening as the standard 30 year mortgage hits the 6% mark. The biggest question, and the bombshell for the market is when does Ben start talking about raising the FED rates to slow down inflation. This is a hella of a catch-22, inflation keeping homes prices stable, or at least putting a temporary floor underneath them and saving the banks from collapsing, against the risk of run-away inflation pushing longer term rates higher to the point buyers leave the Real Estate market, and those trapped in ARM's start seeing higher monthly payments as the re-sets begin. Small business will start to reduce borrowing as costs move higher putting the brakes on what little increased production has occured in the last six months along with Credit card rates that would escalate higher, and on and on...............all leading to a double dip recession, or even worse, a major depression on the horizon.
The DAX, is up against Fib fan resistance now from the Gray fan, and is getting painted into a corner.

Here is the new short term Fib fan chart for the SPX, the one I have been posting ran out of room to cover the whole rally from 1044.50, so I switched from a 15 minute chart to a 30 minute chart.
***I plan on posting a smorgasbord of charts this week-end, a mix of different markets and indexes, those charts I normally do not post during the weekday, but always keep on the radar.

2 comments:

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  2. LT yields are not going because of increasing inflation expectation, but because of increased sovereign risk default, IMO.

    Just have a look at the current balance sheets of governments worldwide....an enormous supply of bonds is coming to the market that will overwhelm demand, hence yields are going up.

    Government bonds are not risk-free anymore....and this has huge repercussions. It will bring the whole equity market down.

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