The Long End Breaking: Why the 5.5% Treasury Bond Changes Everything
🌟🌟🌟The bedrock of the global financial system has just experienced a huge structural fracture. For the first time in 22 years, the 30 year US Treasury yield ripped through 5.5% while the benchmark 10 year yield touched a menacing 19 year high of 5.23%.
This isn't the Federal Reserve pulling short term rates higher. This is the open market actively revolting against the long term price of money.
The long end is breaking because bond investors are demanding a huge painful premium to compensate for a reality that US government has to accept.
My Take:
I will continue to dollar cost average my index ETFs like $State Street Portfolio S&P 500 ETF - SPDR(SPYM.US)because I am letting the "weighing machine" of the market do the heavy lifting while neutralising the threats of a high interest rate environment.
As Benjamin Graham famously said:
"The stock market is a voting machine in the short term but a weighing machine in the long term."
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