ACTV - A Black Swan In Plain Sight: The 10-Year Treasury Yield To 6%

2024-04-14 16:46:43 ET

Summary

• Due to high government spending and a series of hot inflation reports, Treasury yields are near 20-year highs, with implications for housing, autos, banks, tech, and the stock market.
• The potential for much higher yields is supported by theoretical, practical, and historical reasons.
• We could easily reach 6% for 10-year Treasury yields, 9% for mortgages, and 8% for car loans in 2024.

Since late October, large-cap U.S. stocks have seen a furious 25% rally based on the idea that the Fed will soon pivot and dramatically cut interest rates. The move in stocks has been driven almost entirely by a change in valuation and not a change in underlying earnings. I've looked high and low for evidence of an AI-driven earnings boom for stocks, but when you look at the actual data, S&P 500 ( SPY ) earnings have been roughly flat since 2022 . The current scenario of rapidly-increasing valuations without a corresponding increase in profits is unsustainable. Now add in a series of reports that inflation isn't going away as planned , and the market has a problem....

For further details see: