How Many Negatives Make a Positive?

How Many Negatives Make a Positive? For all intents and purposes US and Canadian real interest rates are now negative across most of their yield curves.  Should investors listen to the bond market which sits at historically low and negative interest rates or the S&P500 that is again flirting with all time highs?  TRI advises caution for risk assets, as the topping process for equities continues and we do not yet have enough negatives to make a positive risk/reward profile for risk assets. The business cycle is declining and on the cusp of contraction.  The Federal Reserve and the European Central Bank confirmed this as they lowered there key short-term lending rates again and are again implementing various forms of Quantitative Easing. Source: Tradingview.com Longer term (10 and 30 year) US nominal interest rate now average around 2%. As seen below, US inflation is averaging about 2%.  Two minus two equals zero. The 10-year term real interest rates are -0.3%.   Even the 0.25% countertrend bounce higher in interest rates since early September has not put a dent in the downtrend in rates. Source: www.bls.gov Daily and monthly cycles and trends are bullish for the bonds, while the weekly cycle and…

Continue Reading
Close Menu