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Bob’s Stock Market Weather Forecast Newsletter- July 2016

WEIRD!

The reaction of world bond markets to the Brexit vote has truly been stunning. The very long cycle of lower interest rates than began in 1981 continues. A bottom should have occurred about a year or two ago and up until recently that bottom looked good. Then we had the Brexit major event. That set off a frenzy in the bond market. What is going on?

The money is flowing first into US bonds which still sport positive yields. With the Fed now owning 20% of all US Bonds, there is more demand than supply for a world hungry for yield. A huge downward force on yields is occurring as a result. There just aren’t enough bonds to satisfy the demand.

Why invest in European or Japanese bonds if you won’t even get your money back? As long as the US GDP can grow, even at 2%, I don’t think US rates will go negative. But in the next recession, I predict negative rates here unless that recession is years away.

In the realm of “weird impacts”, I see a scenario where the US Stock Market….click here for more.