The Ticking Time Bomb

While last week's 2.5% stock market dive is competing with bitcoin's 50% January haircut for attention and headlines, interest rates have surged higher. Below is the 30 year T-Bond's rate, which started 2018 under 2.70% and has risen to over 3.0% in just about one month. At a clip of 10% a month, this rate could be over 5% by mid-year. Make no mistake about it, a 5% 30-year T-Bond crashes not only the stock market, but the economy, and the fallout would be catastrophic.

The last time this rate was above 5% was in 2010, with the Dow at 10,000. Let me repeat that: The last time the 30-Yr T-Bond was yielding over 5% the Dow was 60% lower than it is today. 

On the technical side of this ledger the defined trend in rates turned higher at the end of last year. Pattern recognition, a/k/a Elliott Wave Theory, is counting five waves higher but is only just at the beginning of a torrid Wave 3. The first leg of this advance is targeting 3.5-4.0%. By then, expect the financial markets to finally take notice, but by then the ticking will be reaching a crescendo that will by its own momentum, bring the entire house of cards down. 

You heard it here first. 

 What happens to Bonds when interest rates rise: