Bonds And TLT Risk

Bonds have been dropping for a few years and started another decline in September of last year.

I posted recently that a Fed rate cut would actually potentially risk the stock market and the economy. That's opposite contemporary thinking.

If a Fed rate cut further spikes yields, the economy would likely get hit by higher rates because consumers couldn't handle the extra expense. The stock market would also likely get hit by repricing higher yields based on DCF formulas that are central to asset pricing.

Historically when the yield curve moves positive from negative, as it's recently done, it's hurt the economy and stock market. Based on the explanation above we can understand why.

We are watching many other factors in the stock market to help us decide. To know the key levels that we're watching in TLT, SPY and our real-time daily take sign up for a free trial.

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