Outlook
Yields may have peaked in the short term and stocks are looking oversold and back to prior lows. I'm expecting a short term bounce in the SPX and a pull back in Yields.
Assumptions:
Long treasuries
Long SPX
Short USD
Long Oil
SP 500 vs 10y Treasury Yield
The 10y yield has a negative correlation with the SP 500 in 2022. As yields skyrocketed, stocks tanked. Rates may even have been forecasting the pivot in July's rebound of the SPYs, pivoting almost 2 weeks before the equity markets.
Market breadth looks at all the stocks in the SP 500 and determines if they are broadly above or below their 50 period moving avg. Over the past 2 years it has been under 5% only 3 times, briefly. This indicates an oversold environment with a potential volatile snap back.
Mortgage Rates and Yields
30y rates blew past 6% looking to test levels all the way back to 2008. Rates have doubled since the beginning of the year.
Rates are closely correlated to the 10y Treasure yield. Chart below shows the 10Y Yield on massive 46% increase
Rates have doubled in 2022
TNX has been ripping higher and is looking over extended.
The US Dollar is pushing on the resistance rail of a huge up-trending channel. Short term the dollar is likely to pull back reverting to the mean support trend line roughly on the 50ma.