Which stupid Wall Street is finally starting to recognize. You would think that after 3 years of a bond bear market they would have understood sooner. This reminds me of the markets of the late 1960s and 70s where I cut my teeth in this business. Every broker on the planet was shilling bond funds and the new fangled REITs as they all went to hell in a handbasket. Non-subscribers, click here for access.
Withholding tax collections strengthened a bit in recent weeks, but not enough to narrow the deficit and meaningfully reduce the flow of Treasury supply. That supply has been gargantuan over the past month. That has caused the market to liquidate both stocks and bonds to absorb the new supply.
That should moderate somewhat in the next few months, but not enough to change the long term bearish outlook. This is an ongoing catastrophe whose effects have begun to show up across all asset classes as leveraged portfolio losses lead to liquidation pressures. Holders of leveraged bonds portfolios are forced to sell not only bonds, but stocks and whatever else they can get their hands on. It has had a deflationary pressure on asset prices.
In this report we look at the charts and the data to explain what’s coming so that you’ll understand what to do about it.
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