The last two QE programs boosted stocks and bonds, the third QE program known as operation Twist (they buying of long dated bonds) is supposed to keep stocks high and long dated bond yields down. It seems the Fed Operation Twist may be running out of wind, the 10yr Treasury yield jumped up a 0.5% after higher inflation and better economic numbers in the last few weeks. Maybe it was a silly idea after all.
It is strongly suspected that the bond selling is coming from Asia, and you can be very sure that the funds released from the bond sales are not finding it way into stocks. The rise in bond yields will slow the equity advance. In the last few years between April and June we have seen the SP500 peak. This year it should be no different.
Previous post of interest: SP500 Gann Angle Review
If the TNX can jump over 2.4% then 3% is the next target.
If you are bearish on bonds, the TBT ETF is your trade.
