The 10-year US Treasury note closed at 3.08%, its highest level since 2011 was the catalyst for today’s stock market sell-off. The strong close above 3.0%, the resistance level that the notes had been flirting with since April, is a clear signal that interest rates are on their way to 4% or higher. The decline for the Dow Jones Composite index was the first after increasing for the last eight consecutive trading days. During the streak the Dow increased by 4%.
The one-year chart below for US 10 Year US Treasury note depicts that its yield has risen sharply from just above 2% in September of 2017.
The markets are very especially sensitive to the 10 Year US Treasury note. It’s because its yield is the bench mark that is used to set mortgage rates. Therefore, mortgage rates are also on their way up. Its why the XHB, which is the symbol for the Homebuilder ETF fell by more than 2% today. The chart below depicts that the ETF has been in a steady decline since February 2018. It was when the Federal Reserve announced that the discount rate would be raised four times throughout 2018.
With the yield on the 10-year note and mortgage rates increasing the peak for home prices for the current economic cycle is in. It’s just one more reason why investors should prepare for a secular bear market that I believe could last 15 to 20 years and into the decade beginning 2030. The video below which is about how you can protect your liquid assets from and also profit from the secular bear market is highly recommended.
A viewing of the video about all of the secular bulls and bears over the last 200 years is also highly recommended.