A Major Sell Signal For The Bond Markets

The stock market did follow the September cycles down, but the more important development is the decline in the US and foreign bond markets which fell below the 38.2% retracement levels of their respective entire 1980-2022 bull markets. The picture is the same whether we look at the JGB or the bund or in other international markets. It has been said that a break of the 38.2% level signals an underlying fundamental shift. My observation is that the shift may simply be in the perceptions of investors, in this case, from bullish to bearish. It is also a sign that rates are going much higher globally.

Daily Notes

Quarterly Notes

This situation is like that of the 1970s in which rates went well over double digits, equity markets fell, and the economy suffered. Investors sold stocks for less than they paid and the purchasing power of the remaining funds declined; this was a period of very real wealth destruction. Real estate went into a recession (This year is the peak as projected by the 18-year real estate cycle). I note that this sector has fallen the most since the late July top. This trend is likely to continue.

Here is the sector performance since the July 31 top.