30Y US Bonds signal a correction for SPX
As you can see for the past 9 years 30 year US government bonds was in positive correlation with S&P. The correlation is not 1:1 but about 80% of the times they move together. Two incidents where they were separated was March 2020 Covid event and the subsequent bull run. Even during most of the massive bull run they moved together but a drop in 30 year yields translated as smaller corrections for SPX.
30 year yields have always been moving in a range and currently we have reached the top of that range. Based on the previous cycles we can expect 30Y yields to start traveling down towards the bottom of the range while dragging SPX down with it.
As we are in a different situation now than 2021 where there was an abundance of liquidity I expect this next cycle of bottoming impacting SPX more than those bullish times.
I don't mean that this will be a cataclysmic event that will crash and burn the markets but it will the beginning of a volatile sideways move in markets. And per my previous idea I expect SPX to come down around 3650 or lower during this phase.
The economical factors that will be deciding the size of these corrections will be FED's determination in QT and individual company performances.
30 year yields have always been moving in a range and currently we have reached the top of that range. Based on the previous cycles we can expect 30Y yields to start traveling down towards the bottom of the range while dragging SPX down with it.
As we are in a different situation now than 2021 where there was an abundance of liquidity I expect this next cycle of bottoming impacting SPX more than those bullish times.
I don't mean that this will be a cataclysmic event that will crash and burn the markets but it will the beginning of a volatile sideways move in markets. And per my previous idea I expect SPX to come down around 3650 or lower during this phase.
The economical factors that will be deciding the size of these corrections will be FED's determination in QT and individual company performances.
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