stock market inflation rates yield

What The Currency Markets Know About Rising Rates, Stocks Are Missing

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

Subscribe to the Monster Stock Market Commentary to get the Daily Monster Market Commentary and join the 2,934 subscribers getting it for FREE!

[widget id=”wordads_sidebar_widget-41″]

What The Currency Markets Know About Rising Rates, Stocks Are Missing

The stock market has now rallied for four straight days, and it seems to be wasting no time getting itself back in gear. Further, the dreaded inflation reading, cpi, came out today, and it was “hotter” than expected, but fear not, equities did not care. The next test will come tomorrow when the producer price index is released, where expectations are for a m/m rise of 0.4 percent.

[widget id=”text-19″]

[widget id=”text-16″]

The Latest Premium Video: Inflation Rising, Rates Rising, Stocks Do Not Care!


Make A One Time Purchase For $4.99

A Rise To 2,713

I mentioned over the past couple of days, the S&P 500 was tracking towards 2,690, and we managed to close today at 2,698, and the next resistance level shall come at 2,713.

stock market S&P 500

[widget id=”wordads_sidebar_widget-41″]

Rates Rise To 3%

Subscribe to the MCM Stock Market Commentary to get it Daily and join the 2,934 subscribers getting it for FREE!

Is there any doubt at this point, where the 10-year is going? 3 percent seems more and more likely every day, and with rates now at 2.9 percent, it seems it could come any day now.

interest rates yields

[widget id=”text-14″]

The Message For Stocks

But the dollar is sending a fascinating message, with the dollar vs. yen falling below 107 today, and that is a big deal, because the dollar is now weakening significantly, and that could cause the yen to continue to strengthen, perhaps to a 100.

Meanwhile, the Euro is also strengthening vs. the dollar and could be headed to 1.30.

It is sending a compelling message about what the currency market thinks about our interest rate situation. It tells us that despite, the rising rates in the US, the market is expecting that rates globally will rise at an even a faster pace aboard. In fact, a member of the Bank of Japan has spoken about raising rates or slowing the purchase of ETF’s, that is right ETF’s.

One would surely think that if runaway interest rates were fast approaching or inflation, the dollar would be strengthing, as it would prompt the Fed to tighten rates more aggressively. Rising inflation could erode the buying power of the dollar if rates where left alone, but when was the last time the Fed didn’t tighten rates when inflation was rising.

In fact, part of the reason why the dollar had strengthened so significantly in past 2 years is that the ECB and BOJ were embarking on NIRP (negative interest rate policy) and QE, in fact, Japan got so aggressive it started buying ETF’s. It was an attempt to devalue the currency, to spark inflation, it shall work in reverse should they embark on a tightening policy. The market is apparently telling us they are more worry about interest rates rising globally than the US.

[widget id=”text-13″]

Inflation Not A Concern

Why should the equity market care about this? Well if rates are still basically negative with QE still in place in Europe and Japan, and the dollar is weakening merely at that thought of raising rates in those two part of the world, then the inflation picture in the US can’t be that serious yet, and the stock market will realize that at some point.

But like I have said before, the equity market isn’t the sharpest tool in the shed when it comes to this type of stuff.

[widget id=”text-14″]

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

Just $200 Per Year – Get Your Free 2 Week Trial

Recent Videos:

Inflation Rising, Rates Rising, Stocks Do Not Care!

Stock Price Continue To Rebound, More To Come?

Stock Market Bouncing Back

A Line Drawn In The Sand?

Searching For The Market Bottom

We May Have Just Hit Bottom

Machines Gone Wild

Don’t Freak Out About Friday’s Sell-Off

How The “Street” Got Apple So Wrong

Free Articles Written By Mike:

Roku Options Traders Bet Stock Will Rise 15%

Why Amazon’s Record Stock Gains Are Over

Netflix Options Traders See 13% Stock Rally

3 Biotech Stocks Facing Steep Declines Ahead

Broadcom’s Bid For Qualcomm Will Fail, Traders Indicate

Tesla Analysts See Soaring Sales Amid Investor Skepticism

Cisco Traders See Stock Rebound Despite Weak Growth

4 Chipmakers Rising During the Stock Market Sell-Off

Why Alphabet’s Recent Declines Creates Opportunity

Why Netflix May Fall 10%, Setting Up Longer-Term Rise

Nvidia’s Short-Term Volatility Could Bring Long-Term Gains

Join our 2,934 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe


[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]

Photo Credit Via Flickr


Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.

© 2018 Mott Capital Management, LLC.  Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #sp500 #yields #inflation #hedge #stocks