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Monday, July 16, 2018

Yield Curve Looks Very Bullish For Stock Market

yield curve bullish for stock market
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Are you worried about the stock market because of the yield curve? Don't.

Before the yield curve inverts (which means the two-year yield would be higher than the ten year yield) it has to approach zero.

That approach to zero as you see in the chart here is amazing for the stock market.

The blue line represents the yield curve. The red line is the stock market. Just about every time the yield curve shrinks to zero the stock market rips higher.

Low rates act as the denominator to value future cash flows. As that denominator shrinks the present value of future cash flows races higher. Also a low yield alternative encourages investment. Bitcoin wishes it had this setup.

So before you worry about the yield curve there's reason to be very bullish about the yield curve's impact on the stock market.

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